IBM & SaaS

(Via WSJ) IBM recently has invested heavily in developing the software-services market, which offers an avenue for the company to sell bundles of programs, including its own middleware and database software, as well as hosting services. IBM's move is part of a trend in the software industry as it diversifies away from the traditional model of selling software as a product. The service model allows customers to pay for usage and is seen as reducing the risk and costs of owning and maintaining software for information-technology buyers. IBM believes that the portfolio approach will be absolutely critical.
IBM,with the recent acquisition of Corio Inc is stepping up its efforts to help software makers make a transition into the business of "software as a service." IBM launched a program offering tools and support to help software makers roll out the new business strategy, a move away from the industry's traditional licensing model. With software as a service, one company hosts the software application, such as for payroll management or accounting, and provides those capabilities remotely for client companies. IBM is hoping to expand its network of 70 software-as-a-service applications partners in a bid to provide a more flexible alternative to offerings from competitors such as SAP AG, Oracle Corp. and Microsoft Corp.'s Great Plains unit.IBM’s hodgepodge of partners, which include small vendors such as Intacct Corp. and Digital Union, is still far from offering a legitimate threat to SAP and Oracle.