Microsoft is evolving towards delivering software-as-a-service (SAAS), although it says it does not see this model taking over completely.
"We are definitely evolving towards a SAAS model of delivering software as a hosted service using the Internet as it is part of Microsoft`s strategy to focus on what CTO Ray Ozzie calls 'services in the cloud`," says Cyril Belikoff, information worker business group executive, Microsoft SA.
Belikoff says Office Live and Windows Live are the beginning of this evolution, but he says this process will take time and both business models are likely to co-exist for the foreseeable future to meet the needs of different market sectors.
US business strategist Daniel Burrus, who will be in SA next month at the invitation of Microsoft, says this strategy is in line with one of the key principles he has developed for anticipating and capitalising on future technology trends.
Burrus says the "both and" principle dictates that future competitive advantage comes from being able to integrate the old and the new to create higher-value combinations.
Market response
Belikoff says this is what Microsoft has done in the past two years by introducing various opportunities for companies to access applications via the Internet on a subscription basis from hosting partners.
"The trend towards delivering software as a service cannot be ignored and this part of the business has grown by 300% in the past couple of years," he says.
According the Burrus, the trend of enabling customers to choose the model that best suits their business is part of the increasingly consultative approach by software vendors. He says this approach has developed in response to businesses being better informed about technology in the Internet era.
Although proponents of SAAS say small and medium enterprises are the most obvious beneficiaries because it eliminates the need for large capital investments in software, Belikoff says there has been significant response from enterprise customers for vertical applications.
"There is no question that SAAS is big on the agenda for the enterprise because it enables companies to access the software they need to gain competitive advantage as and when they need it as an operational expense," he explains.
Belikoff says SAAS will enable Microsoft to access new markets as well as offer customers a greater flexibility of moving between the different licensing models as business needs dictate.
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