CRM software, offered as a service, or on-demand as some like to say, was identified as a 'Disruptive Innovation' a few years ago, and with its current trajectory this appears to be an excellent prediction. In fact, though there are now several thousand companies that have adopted on-demand CRM, it is still a disruptive innovation because it does not have clear acceptance in the mainstream marketplace, yet.

The term 'disruptive innovation' is from Geoffrey A. Moore's must read for any entrepreneur book "Crossing the Chasm." The idea is that some innovations are so disruptive to the marketplace that they require a strategy to overcome the forces that would prevent their adoption. Disruptive innovations do serious damage to established businesses, methods, technologies, etc., so the pushback from some in the marketplace is huge.

Moore identifies several things that must happen before a disruptive innovation breaks through into the mainstream and one of them is the development of support and add-on products in the marketplace. A good example would be all of the companies that offer training classes for using desktop software like word processors and spreadsheets. Hey, if the software was easy to use would it have broken through so quickly and with such tremendous rates of adoption? Maybe not.

I bring all of this up for two reasons. First, we have recently heard of the idea of an online AppExchange. This will enable developers to offer Software as a Service products from an AppExchange website. You will be able to test it, look at it, try it out and then purchase it. I have to admit that it's one of the best ideas that I have come across in the SaaS field, but it has raised howls of either laughter or protest (which by themselves are also good for SaaS - I bet there are a lot more people who know what SaaS is today than a few weeks ago).

Second, it goes back to an earlier post about JotSpot's Long Tail of Software - "millions of software products for dozens of companies." You can read about it here. In other words, we are moving from generic software to software that understands the uniqueness of your business model. And from where I sit, this can't happen fast enough. The new economy that we often hear about is not just about the technology: It's about the economy technology enables. There are now so many businesses that are unique in ways we could not have imagined 10 years ago. Companies that, for example, act as supply chain brokers, but have no warehouses or truck, just really good software. Technology helped to make these businesses possible, and now technology has to catch up to serve them.

NetSuite has an offering, NetFlex, which enables companies to write add-on products and integrate them with NetSuite through Web Services APIs.  And while SAP is in the process of opening up their software for add-on products with web services, NetSuite released their Web Services API for the CRM module 3 months ago. So there is the ability to integrate third party products and add-ons to NetSuite, today. (SightLines Consulting sees this as great opportunity.)

As SaaS vendors like NetSuite and others open up their applications and encourage additional products to run on their platforms, the disruptive innovation, which is on-demand CRM, will make it further into the mainstream, as will so many other software products. Think back just a few years - people were skittish about using a credit card online. Now, whenever you see a banking commercial they emphasize that they have free online banking. SaaS is an innovative technology delivery method, but once we are over the hump of market pushback, businesses, and consumers, are going to adopt SaaS in great numbers.