The roles of SaaS is certainly a hotly debated topic. I just saw two different views expressed recently. First, in Red Herring, "Sassing SaaS" describes SaaS as hot, but focuses on its shortcomings. It talks about the issues around security, customization, interfaces, service levels, etc. making SaaS not appropriate or desirable for certain industries and markets. Second, in The Intelligent Enterprise Weblog, "Future of Enterprise Software in a SaaS World" describes how SaaS is already reality for many organizations and figures prominently in future buying plans. It discusses how all the things in the Red Herring article, though important, are not critical issue. The author argues that it is the acceptance of SaaS by enterprise IT organizations that is the biggest issue in implementing SaaS.
So which is it? My experience with HCM applications is that only a small percentage of IT organizations are steadfastly against using SaaS. They are concerned with security, customization, interfaces, service levels and more. However, if it is the solution and delivery model that best meets the user needs, then they are supportive of it. I find IT organizations more concerned with trying to leverage their existing applications and to minimize the number of interfaces they need to maintain. The resistance is around using "best of breed" applications, not SaaS as a delivery model.
What do you think? Is SaaS over-hyped? Will SaaS vendors ultimately displace existing providers of enterprise applications? Will SaaS vendors and traditional enterprise apps vendors continue to co-exist?