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As expected there was a lot of fuss and bother emanating out
Houston this week in the wake of
the annual Microsoft partner conference.

Once again Microsoft executives led by Steve Ballmer touted
the company’s
grand vision for Software Plus Services
as solution providers again gnarled
their teeth about how they will make money in a world increasingly dominated by

After all, the pricing of SaaS offerings tends to be down
right cheap compared to on-premise software and, worse yet, most of that
revenue tends to go directly into the coffers of the vendor.

But fear not, like most things when it comes to enterprise
computing nothing ever works as well as advertised. A recent study
of 318 IT organizations conducted by the Burton Group and Baseline Magazine
a sister publication of Channel Insider, drives that point home in spades.

The things that IT organizations seem to like most about
SaaS is that there is no in-house maintenance required for the application, it
takes less time to roll out and can be accessed from anywhere just about any
time. The things that IT organizations don’t like about SaaS are potential
security breaches, lack of access in the event of dropped Internet connections
lack of customization and the fact that they have to trust backup and recovery
to the application provider.

More importantly from a solution provider’s perspective,
customers report that they encountered twice as many bad surprises as good
ones. In particular, integration with existing systems, training, configuration
and data migration were all cited as problem areas.

There are two significant implications as a result of these
findings for the channel. The first is that there is significant high-margin
services revenue to be generated from helping IT organizations deal with
migrating to a SaaS application. The second is that there are still a lot of IT
organizations staying away entirely from SaaS because of security concerns,
problems with integration, inability to determine a positive return on investment
and the lack of ability to customize the application.

There is no doubt that SaaS has emerged has a viable model
for delivering applications. There is also no doubt that SaaS is a precursor to
a larger wave of cloud computing services that will significantly alter the way
we think about enterprise computing. That has a lot of potential negative and
positive implications for the channel. But to assume that new computing models
are going to subsume all existing computing models is simply plain crazy.

likely, we’re about to enter an
era of blended computing models
that will put a premium on flexibility as
opposed to arguing over whether the business logic at an given moment should be
running on premise or in the cloud. And with that demand for flexibility, we’ll
see a new opportunity for solution providers to be the architects of a new age
of blended computing.

Michael Vizard is Strategic Content Expert for Ziff Davis Enterprise. He can be reached at