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2008: Buy, Build, Or Rent Your Software?

It used to be that when deploying software, the biggest decision to make was commercial or open source. These days, the choices have expanded to include SaaS and ad-supported software.

SaaS has been making enterprise inroads for several years, and is now a serious contender with packaged software. And while Salesforce has long carried the flag, we may look back on 2007 as the year the banner passed to other hands. Just consider NetSuite's IPO, SAP’s entrance into the space, and the launch of new offerings from hot startups such as Workday.

On the ad-supported side, offerings such as Google Apps and Spiceworks' IT management software are gaining momentum. Spiceworks, which offers its software for free in exchange for displaying ads in a portion of the management console, says its ad revenue has grown 900% in the past year (though the company declined to say how much money that actually translates into). It also says its doubled the number of its users, to 200,000.

For years consumers have been willing to endure advertising in exchange for software and services. Spiceworks is proving that many businesses are also comfortable with it. Spiceworks targets small companies (up to 250 employees) that have small IT staff and cash-strapped budgets.

Of course, ad-supported enterprise software is still in its infancy. It's hard to envision large enterprises embracing this model, particularly when, as in the free version of Google Apps, ads are generated based on user content. This presents significant privacy challenges to large (and regulated) businesses.

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