On-demand business software has gained significant traction in the marketplace over the past few years as demonstrated by the runaway success of SalesForce.com, NetSuite and others. There are many reasons to believe this trend will continue to increase in the foreseeable future - see, for example Gartner's forecast and Phil Wainewright's post Resistance fades as SaaS goes mainstream. Lower TCO, immediate availability and the lack of large up-front investments or long-term commitment are all valid reasons for businesses to consider and ultimately prefer SaaS over the on-premise software delivery model.

What is the real promise behind the buzz and hype of on-demand business software? I believe that in order to answer this question, we should examine the effect of the Web on individuals in recent years. As it often happens, the first generation of Web applications imitated the offline world by providing static content to Internet users. These applications delivered great value in making huge amounts of information readily available to millions of people worldwide. But, useful as they were, the breakthrough in adoption of web applications only occurred after the introduction of a new generation of applications we now call Web 2.0 . This new generation allowed individuals to become active participants rather than passively viewing content created by others. It facilitated collaboration and allowed users to create content, share knowledge and achieve common goals through collaboration and participation.

Similar to web2.0, the real promise of on-demand business applications some like to call Enterprise 2.0 is that it enables, for the first time, true collaboration between organizations. As the business environment rapidly changes, we are all required to focus on our core competencies; we partner and cooperate with other businesses worldwide in order to stay competitive and provide the best solutions for our customers.

On-demand business applications that will deliver on that promise of enterprise collaboration will be able to provide businesses with the tools that truly reflect their business environment – a dynamic and collaborative one.