Although any of the following news items could warrant an entire posting to delve into their individual implications, time only permits a quick assessment at this stage. Contact me if you’d like to discuss them in greater depth.

Salesforce.com’s Winter ’07 Extravaganza: Once again Salesforce.com (SFDC) has exceeded expectations. The company had promised to release its new Apex development toolkit at this time, but at its Winter ‘O7 event SFDC added a few more features and new initiatives to extend its leadership in the Software-as-a-Service (SaaS) market.

• The Apex now permits customers and developers to more easily and extensively customize the SFDC user interface and reconfigure the on-demand application templates. The new development toolkit also permits extended data model customization and workflow modifications.
• AppExchange is being expanded to focus on vertical market applications. Building on its tremendous first-year success focused primarily on horizontal applications, SFDC is now encouraging its AppExchange partners to develop vertical market solutions aimed at specific industry requirements. This will make the on-demand applications more relevant to a broader population of potential customers. It will also further frustrate NetSuite who has been trying to keep pace with SFDC by focusing on vertical market applications via its SuiteFlex integration platform. SFDC claims it already has over 100 vertical market applications ready to go.
• SFDC also unveiled a new Call Center Edition of its application which supports computer telephony integration (CTI), integrates with softphone capabilities and permits screen pop-up records. The new application will integrate with Cisco, Alcatel, Nortel, Avaya, Genesys, Pandora Networks and Five 9 platforms.
• Further demonstrating the enterprise appeal of SFDC’s on-demand applications, the company announced that it had signed new agreements with Ashland, Plantronics, P&G, Baker Hughes, UGS, Dupont, Symantec, Kaiser Permanente, The Hartford and Qualcomm in the last quarter.

Cognos joined the SaaS movement this week by acquiring Celequest. This move follows Business Objects’ purchase of Nsite in November. It is another example of incumbent software vendors (ISVs) trying to buy their way into the on-demand marketplace.

Unlike Business Objects’ decision to acquire a net-native player, Cognos has chosen to purchase a hybrid vendor. Celequest has gained attention with its Lava dashboarding capabilities because it is delivered in either an appliance or SaaS form. However, Celequest is still dealing with many of the same operational issues facing other ISVs. It is still supporting a traditional product portfolio and even its new Lava solution requires considerable professional services help upfront to be properly deployed by customers.

Anyone knowledgeable about the SaaS model will tell you that it is a tough balancing act to support traditional on-premise and new on-demand applications simultaneously. It places a strain on everyone from R&D and marketing to sales and support. It requires dual development, go-to-market, delivery and financial models, adding inefficiencies and complications to day-to-day operations.

So, while the Celequest acquisition may move Cognos into the SaaS market, it will take them extra time to become an impact player.

Meanwhile, Verizon Business Data Center Services is beginning to assert itself as a player in the SaaS market. The division of Verizon Communications announced a agreement this week to support NOW Solutions’ new emPath service. NOW Solutions is a provider of human resource management, payroll and benefit administration services. EmPath is a new web-based version of its software services.

Verizon will be providing the “ping, pipes and power” for EmPath, including the carrier-class data infrastructure, redundant power supplies and network connectivity, physical and data security, and 24/7 monitoring and management.

Verizon’s data center and SaaS enablement capabilities come from amalgamation of Verizon’s past acquisitions and internal resources. In 2006, Verizon’s Internet colocation centers, known as Premium Data Centers. received Statement on Auditing Standards No. 70 (SAS 70) certification from Ernst & Young LPP.

These three announcements in the past week are added proof of the accelerating growth of the SaaS market and the rapid changes underway in the competitive landscape. Contact me if you’d like to discuss the implications of these announcements further.