Software as a service: the next big thing

Cultivating ecosystems

Whatever the merits of the architectural dogfight, one thing is clear: without multitenancy, a SaaS offering can't cultivate a Web 2.0-like community of developers who add functionality that all can share. Instead, you'd have an old-fashioned add-on market that lacked dynamic, instantaneous distribution.

If any one venture stands squarely at the intersection of wild Web 2.0 mash-ups and more conventional SaaS offerings, it's's AppExchange. "It's a brilliant model," IBM's Clark says. "Benioff has scored as close to a home run as you can with that platform." According to AppExchange vice president Lew Tucker, the idea grew out of Marc Benioff's desire to let users share their customizations, which are developed with simple, hosted Web tools against's API.

Users were building project management tools and other kinds of applications for things such as recruiting and HR activities, Tucker says. "We figured out a way that we could package up these customizations that our customers were doing. Just having a [Web site] where customers could share applications was something pretty straightforward to do."

Benioff emphasizes that has built a platform, not just an application.

"That's the change. That's the shift," Benioff says. "We've built the eBay of enterprise applications, a platform for heterogeneous application development and deployment. We were in the enterprise applications ball game; now we're in the application development and deployment ball game."

Independent software developers and developers inside departments and divisions or even IT departments of large organizations can not only build and deploy applications, Benioff adds, but also get high levels of reuse.

Rearden Commerce's platform is evolving along similar lines.

Grady says the nice thing about plugging into an ecosystem is that when someone builds an application on the Rearden platform -- an MRO or meeting-planner app, or myriad other unique composite apps they can leverage as the grid opens up -- they're not just publishing to Rearden and its sales force, but to all of the ecosystem partners.

As the market leader in application hosting, IBM would also seem a likely ecosystem host, but the company isn't announcing any plans -- yet. When asked if there are any comparisons to be drawn between IBM's community of SaaS providers and AppExchange, IBM's Clark dances around the question.

"I can only go so far here, because obviously there are other shoes to drop," Clark says. "The short answer is -- there will be a great comparison."

Meanwhile, Clark -- who serves as a sort of IBM ambassador to the world of venture-backed innovation -- observes that mini-ecosystems have already evolved around many of the SaaS partners IBM is working with. "Intacct will tell you that they're a platform unto themselves. They've got APIs, they've got the abilities to mash up other kinds of things. Same is true with Employease to some extent."

Indeed, when asked whether Employease has plans to cultivate something like's AppExchange, CEO Jeff Beinke doesn't rule out the possibility. In addition, Employease just built out its functionality significantly with a new payroll processing service introduced earlier this month for the midmarket.

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