Although often pigeonholed as only suitable for smaller businesses that need to get projects up and running quickly and at minimal cost, SaaS is proving itself as a model with the legs to appeal to blue-chips. Leading the way is the poster boy of the SaaS generation, Salesforce.com, under the charismatic leadership of ebullient CEO Marc Benioff. Developed as a system primarily intended to automate the needs of sales executives and keep tabs on customers, the company has helped create an opportunity for peers and rivals by proving the scalability and reliability of the model. Also, having originally appealed to smaller firms, Salesforce has been instrumental in showing that SaaS can also be appropriate for large companies. Customers with thousands of Salesforce seats include Merrill Lynch, Cisco Systems, Dell and payroll giant ADP.

Although the bulk of Salesforce revenues still come from sales force automation and CRM services, the company's bold ambitions extend well beyond those confines. Already closing in on becoming a US$1bn revenue company, the nine-year-old firm's next aim is to be at the center of a developer nexus where thousands of independent software companies and end-user organizations develop programs using Salesforce's developer tools and datacenters. Supporters say that plan could make Salesforce the new Microsoft for a generation of computing architectures that rely on resources being located "in the cloud" rather than on the hard disks and tape drives of desktops and servers.

"The future of computing is on the internet," Benioff has said. "What we're witnessing is the end of software."

The company's hyper-growth and brash marketing have made Salesforce synonymous with SaaS but it has been joined in the limelight by other successful companies that use the same model.

These include call-center contact management firm RightNow Technologies, business applications providers NetSuite and Intacct, employee performance management firm SuccessFactors, and expense management outfit Concur Technologies.

SaaS is also making inroads among the world's largest software companies with banner-name developers moving to become, or at least rebranding themselves as, SaaS players. In the last 12 months alone, SAP, Oracle and Microsoft have introduced major initiatives, while Cisco has acquired WebEx for its web-based conferencing service.

SaaS strategy

Many firms still view SaaS as a tactical offering for small and medium-sized companies but that is changing. RightNow is aimed squarely at enterprises and can list British Airways, T-Mobile, Vodafone and many other brand names as being on its impressive customer roster. Also, NetSuite has thousands of seats at Carphone Warehouse, Concur sites include IKEA, and SuccessFactors counts Kimberley-Clark and Radio Shack among users. Underlining the scale of these providers, NetSuite and SuccessFactors have recently floated on the public markets, joining veterans such as Salesforce and Concur.