While I have been a strong advocate for software as a service I have recently begun to modify my views. It is not software that is the driver but rather the information that is processed on behalf of the customer that is critical. Software is just a tool - if we processed the information faster, for less cost and more reliably using a slide rule no one would really care.
To do the job better as a service you need to build deep domain knowledge and continuously develop best practices based on customer involvement. This provides the economic model to make a service model work, not providing software.
As we move into this world software is going to become a non issue as it is becoming essentially free (or close to as a percentage of overall costs), it is now a well defined tool. The number of options for tools and platforms is large and the differences are shades of grey.
The real value of a service based model is going to come from those companies who build services to process information faster, cheaper, and more reliably by using the tools more effectively to process information not the builders of tools and platforms.
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