On-Demand Fast Forcing Change In Staid Business Software World; SAP, Microsoft, Siebel, other big firms facing a horde of rising upstarts.(A)

Publication: Investor's Business Daily

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COPYRIGHT 2005 Investor's Business Daily, Inc.

Byline: J. BONASIA

Buying business software has never been fun or easy.

Many companies pay for software functions they don't use. Integrating various software programs into a company's computer system can be complex, costly and time consuming. And then there's no guarantee the dang thing will work as planned.

These facts spurred a fresh approach that's reshaping the business software industry. It's called software-as-a-service or on-demand software.

Vendors, not the corporate users, host the software and deliver it as a subscription service over the Web. The software isn't licensed or sold on disks, but instead is rented out as needed.

The on-demand approach cuts users' costs. Thus, many providers of on-demand software are prospering, while the traditional software companies are being forced to adapt.

"The software industry took massive advantage of customers in the 1990s," said Credit Suisse First Boston analyst Jason Maynard. "Now we're seeing the customers strike back."

Outpacing Traditional Sales

All business software players are being affected by on-demand, says Ed Thompson, an analyst with research firm Gartner.

"The traditional model isn't broken," he said, "but...

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