There are many reasons why companies look to software as a service (SaaS) as opposed to on-premise systems for their computing needs. Nick Carr does of good job of delineating many of them in in his post "The SaaS Ramp." This paragraph in particular caught my eye: That makes intuitive sense. If you're happy with a SaaS setup, what are the odds of waking up one day and saying, "Well, that worked well, but now it's time to go out and buy a lot of hardware, expand our data center, hire a bunch of new IT specialists, and pay a lot of money to have the same software installed on our own machines"? Pretty low, I'd say. That doesn't change the fact that, as Farber says, there's "a lot of engineering ahead." But if you assume that the engineering will get done, it's hard to look into the future and see SaaS as being just an on-ramp to an old highway with high tolls.
Carr is right that once a company starts down the SaaS road they are very likely to stay on it. But he misses one of the main reasons, as do many commentators on SaaS. Small and Medium Enterprises turn to SaaS in the first place and continue using SaaS over time because there is a huge technical skills shortage in their market. The technology job market is defined by large companies that hire, train and refine technologists by the boatload. But in these companies most techies become specialists. Because of their size large enterprises can afford, and frankly they need, people with highly developed skills in a speciality areas. Specialization is more the norm in Information Technology than in any other area of the labor market. Just read a few posting on Monster. All hiring companies are searching for highly specialized skill sets. Small and Medium Enterprises on the other hand really require a generalist. They need people who can fix a pc, reboot the database after a cold backup, take care of phones and networks, do some business analysis and code everything from html to cobol to pl/sql. These skill sets simply do not exist in one or a few people. So what do you do? You still need the computing potential and the data but how to get it? This is where SaaS comes in. Even if you wanted to hire the folks you need to run your IT you can't find them. But with SaaS you can have the computing you need without the IT infrastructure, including the personnel. This is the other side of the SaaS picture. Yes, you do not have to maintain IT infrastructure, but the SaaS products must be built in such a way that you can operate them at peak efficiency without IT staff. When SaaS moves into areas requiring IT staff, like interface and integration with other systems, it immediately takes some of the shine off of the apple. SaaS vendors, including NetSuite, have to be careful to not put their applications into this space. They have not yet, and in fact have gone to great lengths to make the applications almost entirely click, not code. If word ever gets out that it requires a technical resource to run NetSuite or any of the other SaaS players, well that's the end of SaaS and the beginning of Software with the Same Old Infrastructure. I'm not even going to try the acronym. | 
