SAP, Oracle, Microsoft, and other traditional software vendors would argue that SaaS doesn't need to be multitenant and applications don't need to be rewritten for SaaS. But then why call it SaaS; why not just call it hosted software (or, as it was known in the '90s, the ASP model)?
So lets consider SaaS more in the vision of Salesforce.com and Workday, and see where both Oracle and SAP stand on their offerings for larger businesses.
The model emerging at SAP is similar to Microsoft's "software + services" approach. It's planning a line of SaaS modules or smaller applications that integrate with a customer's big on-site SAP applications. That approach, if it works, could let SAP protect its profitable licensed software business, get more services revenue from those customers, and address concerns large companies have with putting some of their most sensitive business data in the cloud. Former Oracle executive John Wookey will head this new strategy.
Oracle does see itself playing a noticeable role in SaaS for both large and small companies ... large and small software companies, that is. It wants to be the go-to infrastructure vendor for software companies providing SaaS to their customers. With its "Oracle SaaS Platform," it offers database, middleware, application management, and virtual server software to build the data centers for serving up SaaS. Oracle notes that many SaaS vendors already are using its platform, including Intacct (human resources) and Xactly (CRM). Those vendors, of course, have to pay Oracle traditional licensing and maintenance fees.
Both strategies show that Oracle and SAP want to play in the SaaS world, but have no plans to mess with the cash cow: traditional software licenses and maintenance revenue that come from large companies. And it will likely stay that way unless Workday, Salesforce.com, or another vendor poses a real threat to their installed customers bases.