Whenever I’ve talked to SaaS (ASP we used to call them) customers invariably I find that as they grow increasingly dependent on the service they want to more tightly integrate it with their inhouse business applications. That’s a problem, of course: if the ASP and not you dictates data formats, service levels, and so forth, then you don’t control your software. Most now have XML/SOAP interfaces and while this helps in rationalizing syntax, if the semantics are different, then the problem can be intractable. And certainly there are performance issues: it’s difficult to bulk load a customer database via SOAP over the Internet, for example.
To me this is the great challenge of the SaaS/ASP: how do you appear local, an integral part of the customer’s computing ecosystem, and still generalize enough to have a global value proposition.
While the ASP model will survive, its utility must be questioned: if you accept that compliance, rapidly growing competition (some of which is on a global scale), and agility are key new drivers, then how your software addresses those needs represents the essence of your competitive differentiation. Ideally, YOU control moment by moment how your information infrastructure responds to rapidly changing market conditions.
Computing is not a utility: it’s your crown jewels.