SaaS and Service-based Architecture

Greg Olsen, the CTO of Coghead, has posted a fantastic piece, entitled, "How not to end up as an anachronism."

Without going through the nuts and bolts of the entire thing, let me just say that this is a MUST read.

And here's a juicy quote:

"The move to SaaS applications built on SaaS is a much more profound shift than the move from on-premise applications to SaaS applications. The software industry is beginning to display characteristics that mimic the supply chains and service layering that are commonplace in other industries like transportation, financial services, insurance, food processing, etc. A simple set of categories like applications, middleware and infrastructure no longer represents the reality of software products or vendors. Instead of a small number of very large, vertically integrated vendors, we are seeing an explosion of smaller, more focused software services and vendors. The reasons for this transition are simple: It takes less capital and other resources to create, integrate, assemble and distribute useful software capabilities."

I believe that Greg is right on the money with the idea that the very process of building a "software company" is being altered by the service-based architectures being provided by "saas infrastructure enablers." It is removing the friction of capital from the software-innovation value chain, and thereby, releasing more "innovation value" over shorter timeframes.

[Update: Because the universe is a place of deep and unending irony, Amazon's web services have experienced a widely reported outage -- just days after Greg's article.]