I was recently on a panel on Software as a Service: An emerging Business Model. While Software as a Service (SaaS) indeed has recently emerged as a hot topic, the practice has been around since 1949 when Henry Traub founded Automatic Payrolls, Inc. in Paterson, NJ. Henry didn’t own a car, and delivered the first payroll to New Era Dye and Finishing by bus, but soon he purchased an Underwood bookkeeping machine, some Friden calculators, and an Addressograph. Later the company invested in comptometers and, eventually, computers, renamed itself Automatic Data Processing, Inc. (NYSE:ADP), and now does $8B a year in business.
The next iteration of SaaS occurred when time-sharing became popular in the 1960’s and 70’s, and companies such as ADP, Tymeshare, and GE offered financial and statistical software on centrally managed computers connected to users over telephone lines. This era also saw the introduction of the computer as a tool for communicating and sharing information, a concept that was forgotten during the PC era and rediscovered with the widespread adoption of the Internet.
When the PC took off in the 1980s, the action moved from the data center to the desktop, and many thought the era of large, professionally managed computer centers was over, but when the Internet became accepted as a business tool in the 1990’s, it became obvious that all that data needed to live somewhere and the server farm was born. The server farm looked a lot like the computer rooms of old, but the mainframes were replaced with microprocessor-based servers and the glass house showplaces were relocated to obscure co-location facilities. At the same time, industry pundits heralded the dawn of an era of utility computing and application service providers.
While many Application Service Providers (ASPs) host traditional enterprise software packages, the real excitement today is around applications that were specifically designed to be offered over the Internet and accessed through the Web. The best known of these is Salesforce.com which in 5 years has grown to 399,000 subscribers and $300M in revenues.
Saas offers the customer many advantages over the traditional host-it-yourself model:
• The costs installing and operating the software and of running a 24x7 data center can be amortized across multiple customers and time zones, with the savings being passed on to the customer in terms of lower costs, higher reliability, and less distractions from the core business.
• Payment is tied to actual usage over time, instead of being incurred up front before the benefits are realized.
• Solutions can be adopted incrementally. It is very easy to do a pilot project with a small work group and then scale up gradually.
• Since the software developer is also the one running the system, usage patterns and thus customer requirements are easier to discern and this can be addressed quickly.
• Web services interfaces, based on standards such as XML and SOAP, allow applications to be built which encompass services from multiple providers.
This last topic is what’s really new and interesting about Saas, as it allows delivering solutions that combine the best features of different services. One that is close to home is the partnership between Convoq and Salesforce.com. By using Web Services to link the two products together, a Salesforce user can, with one click, launch an on-line meeting in Convoq’s ASAP, and a Salesforce user can look up or create a record in Salesforce that contains information about the customer in the meeting.
The ASAP Web Services allow any Web developer the ability to start ASAP meetings from with their product. Brainshark, Inc. uses this facility to enable someone viewing a presentation to request a live meeting with the author of the presentation. Shadow Trader Technologies, LLC has built their own “squawk box” that uses ASAP to deliver real-time stock market information to professional traders.
In future releases of ASAP Convoq will continue to expand the scope of Web services it offers – more on that soon.
Some photos from NAB are available at herot.typepad.com/photos/nab_2006. 
I am in Las Vegas for NAB. This is a huge show that started as an annual gathering of the National Association of Broadcasters, i.e. the radio and television industry, and has now grown to encompass all things audio and video, whether over the air, cable, or the Internet. The two big themes this year are HDTV (everything in the TV studio needs to be upgraded) and IPTV (everything that used to go out over analog or specialized digital transport will now be going over Internet Protocol (IP) whether it's the public Internet or that same, standard technology being used over private, managed networks.