I moderated a panel at OpSource’s SaaS Summit this week entitled “Selling SaaS to the Enterprise” which included representatives from Cast Iron Systems, Oracle and the Business Objects unit of SAP, as well as the Manager of Global Operations Business Technology at Pfizer.

They all agreed that SaaS and cloud computing are making serious inroads into the enterprise but still face significant challenges, including scalability, security and flexibility issues.

In response to the flexibility topic, there was general consensus among the panelists that customers want a choice of on-premise and on-demand alternatives to serve various corporate requirements.

Although I’m very proud to have correctly predicted many of the major trends which have shaped the SaaS market evolution, I’ve never believed that the world would move entirely to an all on-demand environment for a variety of customer and vendor-driven reasons. Therefore, I’ve always expected most organizations to operate in an hybrid environment.

As the SaaS movement gains mainstream acceptance, it also becomes less of a revolution. As a result, the radical view of an all, on-demand world has given way to a more realistic expectation of a mixed computing environment, albeit dramatically less dependent on inefficient, legacy on-premise hardware and software.

My previous blog post suggested that the heterogeneous computing requirements of customers calls for a new definition of hybrid solutions based on the portability of SaaS solutions so they can offer customers a choice of on-demand and on-premise alternatives.

The post generated a long list of responses from a wide array of SaaS vendors offering these alternatives, as well as a few purists who said it couldn’t or shouldn’t be done.

Microsoft’s GM of ISV and National System Integrator Partners, Greg Urqhart, gave an updated version of the company’s ‘Software Plus Services’ pitch at the SaaS Summit which Microsoft has been promoting for a few years.

It has been easy for industry purists to ridicule Microsoft’s S+S idea as a self-serving rationalization for justifying its legacy, on-premise business while also attempting to hold current and prospective customers by promising competitive on-demand solutions sometime in the future.

While these are legitimate criticisms which I share, I also believe that Microsoft’s view of customers’ preference for computing choices is right on.  The question is when and how will Microsoft fulfill its promise to deliver a viable and competitive portfolio of on-demand solutions which satisfy customers’ rapidly changing technical and business requirements.

In the meantime, Microsoft is depending on a series of incremental innovations, along with the power of its brand, ISV partner network and channel relationships to safeguard its immediate reputation and long-term revenue against the onslaught of today’s SaaS and cloud computing challenges.

These attributes also fit the criteria I laid out for winning in the Platform-as-a-Service (PaaS) business. Of course, it again depends on how well Microsoft can execute on its promises.

Business Objects Cast Iron Systems cloud computing Microsoft OpSource Oracle PaaS Pfizer Platform-as-a-Service SaaS SaaS Summit SAP Software-as-a-Service