The commoditization of IT is an evil thing if you’re a big-ticket business application software company living on maintenance fees. Business application software is arguably the last remaining piece of the technology stack yet to be completely disrupted by commoditization. Well, that’s about to change, and it’s all thanks to SaaS.

When most people think about the benefits of SaaS, they think about quick implementation, universal access, multi-tenant efficiency, and affordable subscription pricing. While all of that is true, those things are probably not what will make SaaS memorable 20 years from now. I think SaaS will primarily be remembered for commoditizing business application software--to the benefit of both the software industry and its customers.

Take Help Desk software for example. Most organizations using Help Desk software use it primarily to manage trouble tickets. But ticket management is a commodity. We figured out how to optimize that process a long time ago, and there aren’t any secrets left anymore. Two engineers with a background in ticketing could whip up a feature-rich ticketing system in about 6 months. They could build out the full software stack using open source components and, assuming they build it for a SaaS delivery model (why would they do anything else?), install it all on something like Amazon’s EC2 (once it supports persistent data later this year) and have a robust system fully deployed and globally available at an ongoing cost of around $2500 per month. At that cost/configuration, a well designed system could probably support 10,000 active users/agents based in North America, but because the system would be accessible globally and in use on a 24/7 basis it could probably support 20,000 active global users/agents. Do the math. That’s 13 cents per month per agent. The cost for delivering the service to a 1000 employee company with a 15 agent Help Desk would be $1.95 per month. That’s how SaaS is driving the commoditization of business application software.

So, two questions:

1) How much are you paying for your Help Desk software?

2) Are big-ticket business application software companies economically motivated to make the switch to SaaS?

The correct answers are 1) way too much, and 2) no, never.

Of course, commoditization both destroys value and creates value. It obliterates old paradigms while giving birth to new ones. The business application software industry is evolving at a torrid pace. Driven by survival instincts, the industry is innovating in ways that are both risky and exhilarating. And, as always, it’s happening mostly from the bottom up. As Clay Christensen has taught us all, it’s easier to innovate when starting from scratch.

That’s why Helpstream is at the forefront of SaaS-driven innovation. Whether you need a simple Help Desk system (available from us for free by the way), or the tight integration of web technologies to radically improve your Customer Service processes (which make a modern Customer Service application worth paying for), Helpstream is only a click away. When you think SaaS-based Customer Service, think Helpstream.

In the business world, SaaS (Software as a Service) is all the rage these days. In the consumer world, Web 2.0 is “the thing.” Fortunately for us at Helpstream, when we started developing our service, both of these trends were well underway. As a result, we were able to design a service that takes the best of both elements. We are calling it “SaaS 2.0.”

The first generation of SaaS applications – what we call SaaS 1.0 – are basically legacy apps moved to the Web. These apps mirror the look and basic functionality of the old legacy apps while giving customers dollar savings on total cost of ownership (TCO) driven largely by the benefits of multi-tenancy. That’s certainly attractive, but SaaS 2.0 is a different animal, leveraging not only the inherent cost-savings associated with Web delivery, but actually leveraging technologies to provide users with a rich user experience and connectedness that didn’t exist until the emergence of consumer-oriented Web 2.0 offerings.

One of those Web 2.0 technologies is known as AJAX (Asynchronous JavaScript and XML). AJAX allows today’s developers to build rich Internet applications that feel extremely interactive and responsive to users. AJAX typically involves, among other things, the exchange of small amounts of data between a web page and a server, resulting in a level of performance and responsiveness not experienced with typical SaaS 1.0 applications.

Social networking and user-generated content are other by-products of the Web 2.0 movement. It’s hard to think of a consumer Internet service these days that doesn’t enable users to connect with other users and generate their own content, whether it’s a YouTube video or a restaurant review. The combination of social networking and user-generated content has resulted in a very powerful concept known as collective intelligence. By leveraging the collective intelligence of a community, users are getting smarter, faster.

SaaS 2.0 offerings incorporate these Web 2.0 capabilities to deliver a different type of application experience than available with legacy enterprise applications. Take, for example, our Helpstream service. By taking advantage of the flexibility and scalability of SaaS, and leveraging AJAX to deliver a rich user experience, we are able to deliver a modern support solution that can deliver a vastly superior experience to customers.

In addition, the Helpstream service will free customers from being completely dependent on agents and/or articles in a Knowledge Base. In an upcoming version, users will be able to contribute their own experiences and expertise into the Knowledge Base and interact with other users to create collective intelligence that benefits everyone—including agents. This will bring solutions to problems more quickly and will increase the number of problems that can be resolved by users themselves--reducing dependency on agents.

All in all, we feel that the combination of SaaS and Web 2.0 is a powerful one, and that SaaS 2.0 is the future of business applications.