There is no question that Google’s ambitious plans can have a significant impact on the computing world. And, because computing has become an integral part of everyone’s day-to-day world, the Google-Microsoft war deserves plenty of attention, even in the mainstream media and among Main Street businesses.

However, it shouldn’t come as any surprise that Google would move in this direction. It has been nibbling away at the edges of Microsoft’s fortress for a number of years.

Google Desktop does a better job finding files within Micrsoft Office than Microsoft’s own software. Gmail is easier to use than Outlook. And, Google Apps have become a viable alternative to Microsoft Office within a growing number of businesses, non-profit agencies and governmental institutions.

Even more importantly, Google has been making a concerted effort to penetrate the education sector in the same way Apple did over the past three decades to win the hearts and minds of a new generation of computer users–college, high school and middle-school students. Their teachers are even bringing Google Apps into the classroom unilaterally to encourage greater collaboration and make it easier to track school-work.

Despite the fact that many of these same kids grew up with Microsoft Xbox, Microsoft has failed to convert their affection for its games, which are increasingly played online, into any real allegiance to Microsoft’s Office or OS.

So, while Microsoft has been obsessed with derailing Google’s dominance in the search business, Google has been equally focused on dislodging Microsoft from its OS and office ‘productivity’ perch.

Since Microsoft now appears to be making some headway in attacking Google’s core search business with its new Bing search engine, Google figures the time is right to ratchet up its efforts to attack Microsoft’s core OS business as well.

Since last week’s announcement, some analysts have questioned whether the world needs another OS. Widespread dissatisfaction with the costs, complexities and security issues associated with Microsoft OS, applications and Internet Explorer has left the door wide open for a viable alternative to emerge.

Other commentators have questioned whether Google can truly disrupt Microsoft’s monopoly. Industry statistics already show a decline in Microsoft’s marketshare as a result of greater acceptance of Open Source Linux and Apple OS. Yet, neither can be considered as potent a potential competitor as Google.

The recent decline in Microsoft’s quarterly revenues and profits may be another indicator that customer defections are on the rise, and the market shift toward web-based, Software-as-a-Service (SaaS) and cloud computing alternatives.

In the late 60’s, few people took Japanese cars or electronics seriously. Today, American automakers are struggling to survive, and there are no major American electronics companies making their own equipment.

The Japanese auto and electronics manufacturers outflanked their American counterparts by producing simpler, more reliable and less expensive products. They also adopted more streamlined manufacturing, distribution, marketing and sales operations. But, most importantly they were willing to be patient, establishing a ten-year plan to achieve their long-term business objectives.

Google is also promising to deliver a simpler, more reliable and less expensive alternative. It has also put a long-term plan in place. However, don’t be surprised if it rolls out its new Chrome OS before the late 2010 due date.

I suspect that many of the technical aspects of the new OS are already being tested and could easily be delivered before the second half of 2010. However, Google knows that its biggest challenge isn’t perfecting the technology, it is putting the right skills and mechanisms in place to properly support corporate customers.

Organizations will not migrate to a new OS until they are convinced that the vendor is fully prepared to support them. Google’s executives acknowledged that they must do a better job of convincing customers that they can support their needs by putting an end to their “Beta” branding of their Google Apps. Businesses don’t want their day-to-day operations to depend on half-baked applications or operating systems.

So, in the end, Google’s success will depend on putting together the right combination of technical and organizational capabilities to satisfy corporate customers. Google’s new OS doesn’t have to be more sophisticated. It just has to work better.

After all, no one ever accused Microsoft of having the best OS either. It just happened to have the best business model for the past thirty years.

But, the times and customer requirements are changing.

The on-premise world is giving way to an on-demand environment in the ‘cloud’. Packaged applications and proprietary systems are being replaced by Software-as-a-Service (SaaS) and cloud computing alternatives.

As a result, a changing of the guard is also likely.

The BoSS Award program is aimed at promoting the measurable business benefits being delivered by today’s Software-as-a-Service (SaaS)  and cloud computing companies. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations, and greater profitability.

Book4Time offers an enterprise-class, SaaS solution for managing real-time reservations, online bookings and spa management for the leisure and lifestyle industry.

Click here to read about business benefits of Book4Time’s web-based, on-demand solution.

Click here to learn more about the BoSS Awards or to submit an application for an award.

But, I just gave a keynote presentation regarding the state of the SaaS and cloud computing market at SoftLetter’s latest SaaS University in Chicago, where the challenges of developing and delivering successful SaaS solutions were once again brought home in the discussions among the software executives and SaaS professionals attending the event.

Despite it being scheduled on the last day of the quarter and first week of many people’s summer vacation, the event succeeded in attracting about 70 CXOs from a cross-section of established independent software vendors (ISVs) and SaaS start-ups seeking insights about how to succeed in this rapidly growing industry.

Like past SaaS University sessions, the attendees were treated to a variety of tutorials from industry practitioners with a minimum of self-promotion. And, this group of attendees distinguished themselves by asking very pointed questions from the opening bell about specific operational issues associated with the SaaS model.

But, it wasn’t until we got to the working lunch session on the second day of the two-day event that their anxieties came to head. It was during the session focused on the latest accounting rules governing revenue recognition in the SaaS model that frustrations among the established ISV executives began to boil over as they learned that:

• After making significant investments in (re)architecting their applications to be delivered as an ‘on-demand’ solutions,
• After building hosting facilities or selecting a hosting partner to deliver their services,
• After determining how to package, price and promote their solutions,
• After developing a service level agreement (SLA) or comparable legal agreement that clearly outlines the company’s contractual obligations,
• After convincing a committee of IT/business decision-makers to try their solution,
• After determining how much ‘customization’ they can do for specific customers without breaking the common SaaS application and underlying service delivery model,
• After accepting a fraction of the value of application in an initial subscription fee agreement,
• And, accepting all the responsibility for the availability, reliability, security and  performance of their SaaS solution…
• The aspiring SaaS vendors then discovered they would only be able to recognize their subscription revenues on a month-to-month basis, decimating their traditional software revenue recognition models.

This harsh reality is what has kept the CXOs of the legacy, on-premise ISVs up at night hoping that the SaaS and cloud computing movement would disappear or be derailed by a major outage that would send customers fleeing back to the comfort of their on-premises software and systems safely hidden behind the firewall. Of course, the opposite has been true and SaaS/cloud computing market growth is accelerating as a result.

No, from a vendor point of view, SaaS isn’t as easy as it looks.

It can be disruptive and painful. And, the rewards can take a while to be realized.

But, unless a major service disruption or ongoing service failures occur, the SaaS/cloud computing services market isn’t going to go away because it offers customers too many business benefits. And, ultimately it’s the customer point of view that really counts.

And, by the way, there are a growing number of SaaS vendors, and established ISVs as well, who are figuring out how to be successful in this deceptively difficult business.

The BoSS Awards program was announced in January 2009 as the latest initiative by THINKstrategies to bring attention to SaaS and cloud computing companies which are producing tangible business benefits for specific user organizations. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations, and greater profitability.

Manticore Technology is an on-demand, marketing automation solution  provider that enables marketers to effortlessly move sales prospects through the pipeline through demand generation, lead management, lead scoring, and lead nurturing, while feeding their sales team invaluable insight about the interests of each lead. As a result, Manticore Technology customers increase revenues, lower costs, and gain a competitive edge.

Click here to read more about the measurable business benefits Manticore Technology has delivered to its customers.

Click here to read more about or to apply for a BoSS Award.

My original commentary focused on the hesitancy among the major technology vendors to adopt a services-driven strategy that would capitalize on the rapidly evolving Software-as-a-Service (SaaS) and managed services capabilities which were emerging in 2004.

Based on the summary in the GigaOm blog post, it appears that the Private Cloud panel focused on all the reasons why enterprise IT shops have been slow to fulfill their roles as internal service providers.

Of course, the irony is that many of the vendors represented on the panel have encouraged their IT customers to be more focused on managing technology than delivering quality services. That is because despite all the advancements in cloud-based technologies and the success of SaaS and other cloud-based services, the major players are still stymied by their own internal operating and cultural constraints from aggressively pursuing and promoting meaningful cloud computing solutions.

So, it is easy to blame the customer for being reluctant to move to the cloud when traditional vendors are afraid of the business implications and financial consequences of this migration process.

This doesn’t excuse the failure of IT organizations to change their approach to developing and delivering applications, or the way they acquire and utilize computing resources to support them.

It is time to carefully evaluate how today’s rapidly evolving cloud computing services and best practices can be applied to corporate IT operations and leveraged to achieve their corporate objectives.

Some established vendors will use this event as further proof that the SaaS and cloud computing models are not sustainable. Conservative IT and business decision-makers within ‘user’ organizations will use it to justify their decisions to stay away from these ‘on-demand’ solutions.

Ironically, the Wall Street Journal published an article today highlighting the growing efforts of many of the largest software and systems vendors to get onboard the on-demand services bandwagon. The article points out that these vendors have been reluctant to adopt SaaS and cloud computing strategies and offer on-demand alternatives because they undercut the value and profit margins of their legacy products. But, their customers are moving in this direction and they must respond or continue to lose business to companies like Salesforce.com and SuccessFactors.

I’m saddened to see LucidEra fail because I’ve liked the company’s principals and value propositions since their inception. The company’s founder, Ken Rudin, has been an important evangelist for SaaS. And, the company had developed some interesting ways to demonstrate the value of its offerings beyond simple ‘try and buy’ promotions.

But, I’ve been predicting for months that today’s tough economic climate is going to claim many SaaS and cloud computing companies who don’t have sufficient resources, compelling value propositions or clear differentiating qualities to sustain themselves.

The proliferation of players, combined with incentives within companies of all sizes to delay purchase decisions, has extended the salescycles for almost every SaaS company.

This is hurting many of the SaaS 1.0 vendors in particular who had to make significant investments in their SaaS architectures and delivery capabilities before less expensive platforms and computing resources became available from companies like Salesforce.com and Amazon, for example.

Venture firms, who are facing severe pressures from their limited partners, have put much higher hurdles in place when considering new rounds of funding for their current portfolio companies, as well as prospective start-ups.

LucidEra found itself in this bind and wasn’t able to find a buyer to rescue it from an untimely death. Larger SaaS companies, as well as many legacy vendors, are also facing financial constraints which are precluding them from making acquisitions. Other prospective buyers are willing to cherry-pick the assets or personnel rather than purchase the entire enterprise.

Just as the demise of individual car companies or banks doesn’t spell the end of the automotive or financial services industries, the failure of LucidEra doesn’t represent the end of the SaaS era. It also doesn’t mean that SaaS-based business intelligence and analytics can’t succeed. Customer interest and adoption of SaaS-based BI/analytic solutions is growing. But, there isn’t enough demand to support the myriad of SaaS vendors competing in the market.

The demise of start-ups, like LucidEra, is a natural part of the evolution of any new marketplace. It should not be viewed as the beginning of the end of the SaaS or cloud computing industry.

But, it will make it more difficult for other small SaaS companies to convince IT/business decision-makers that they can survive in an increasingly tough economic and competitive environment.

The key will be for SaaS and cloud computing companies to clearly demonstrate the measurable business benefits they can generate to offset these concerns.

Coupa is a leading on-demand provider of solutions that control and streamline purchasing for organizations beyond the Fortune 500. Coupa e-Procurement delivers an easy to use, fast to deploy and affordable solution for requisitions, purchase orders, RFQs, inventory and invoicing, with no hardware to buy or software to license.

Click here to read more about the measurable business benefits Coupa has delivered to its corporate customers.

Click here to read more about the BoSS Awards or to apply for an award.

THINKstrategies’ mission in establishing the SaaS Showplace in 2006 was to make organizations aware of the rapidly growing array of SaaS solutions available to address their IT and business needs. By working with Renovatix, we are now making it easier for organizations to acquire and utilize a widening assortment of on-demand solutions as well.

Renovatix Solutions’ SaaS marketplaces are uniquely designed to enable third-party administrators, including enterprises and other service providers, to private-label their SaaS eCommerce sites and give users single sign-on access to all of their applications.

As part of this partnership agreement, THINKstrategies will,

• Connect its SaaS Showplace directory to Renovatix’s online SaaS marketplace, www.mysmbstore.com.
• Leverage Renovatix’s technology marketplace platform and will make the online marketplace available to SaaS Showplace visitors at no charge.
• Assist Renovatix in selecting future SaaS applications for inclusion in Renovatix’s managed marketplaces, and will identify additional partnership opportunities. 

Beginning today, visitors of the SaaS Showplace can obtain powerful SaaS applications from leader providers such as RatePoint, Google, Citrix, Six Apart, MediaWiki and dozens of others by going to www.mysmbstore.com/thinksaas.

Click here for more information regarding the THINKstrategies/Renovatix Solutions partnership, or visit the SaaS Showplace Marketplace.

The BoSS Awards program is an initiative by THINKstrategies which brings attention to SaaS and cloud computing companies which are producing tangible business benefits for specific user organizations. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations, and greater profitability.

Marketo provides solutions for marketing and sales teams, enabling collaboration throughout the revenue cycle from the earliest stages of demand generation and lead management to the pursuit of revenue and customer loyalty.

Click here to read why Marketo was selected to receive a BoSS Award.

Click here to read more about the BoSS Award program or to submit an application for an award.

The size of the turnout for this event was another indication of the growing level of interest in Software-as-a-Service (SaaS) and the broader cloud computing phenomenon. It may also be an early indicator of the potential power of Intuit as a key player in this rapidly evolving marketplace.

In a previous blog post, I suggested that two of the most important competitive advantages which leading Platform-as-a-Service (PaaS) must display are,

• Sustainability in today’s tough economic climate to ensure they are viewed as solid, long-term suppliers of SaaS development and delivery capabilities.
• An attractive customer base which can make the PaaS vendor a viable channel to market for developers leveraging its toolkit.

Intuit easily qualifies as a potentially powerful PaaS candidate based on both of these criteria. It is a solid software vendor that has built an enormously strong base of small- and mid-size businesses (SMBs), as well as households who take advantage of its financial management applications.

More than two hundred current and aspiring software developers attended Intuit’s forum this week. They were interested in getting insight about the overall SaaS and cloud computing market from a combination venture capitalists and CEOs, including Scott Cook of Intuit who provided his perspectives about building a successful software business in today’s rapidly changing market. The attendees were also curious about Intuit’s PaaS capabilities.

The organizers took advantage of the opportunity to showcase Intuit’s rapidly evolving development platform which should appeal to many aspiring SaaS/cloud computing developers that wants to deliver B2B solutions aimed at SMBs, or even B2C solutions aimed at households using Intuit products.

Intuit’s recent acquisitions clearly demonstrate its determination to be a major player in the SaaS and cloud computing marketplace. And, the turnout at last week’s event illustrates that there are plenty of entrepreneurs and software developers who are interested in leveraging Intuit’s position in the market.

Of course, Intuit will have to provide these developers with the right tools at the right price to fulfill its potential as a major PaaS player.