SaaS vs. Web 2.0

In my readings and in discussions with industry folks this week, "SaaS vs. Web 2.0" has definitely been a common theme. What is the difference between them; where does one end and the other begin? I'm going to attempt to address these questions below.

The term "SaaS" comes with the connotation that it is "for enterprise." Talking to developers and business managers at consumer-oriented web companies, it's clear that they think SaaS has little or nothing to do with them.  They seem to think of their code base as the back end of a cool and useful web site, rather than a web-native application.  The site features dynamic content, social media aspects, etc. and therefore it is Web 2.0.

Based on a discussion with one experienced consumer web developer, I get the impression that many of these companies are solidly in the "grow your own" camp. They strongly prefer to write apps themselves, purchasing readily available and inexpensive elements only when it makes sense. Ask them about CRM, Business Intelligence, etc. and they say their company wrote their own because it wasn't that hard, and, more importantly, they want to work within the confines of their chosen architecture rather than force-fitting someone else's pre-fab modules by writing lots of adaptors. After all, their core competency is developing sophisticated and scalable web apps.

In contrast, there's a clear pattern that companies associating themselves with SaaS are enterprise software companies. That makes sense, because using the term "SaaS" is sending an important message to the customer - if you chose our software, you'll reap the benefits of easy deployment, easy upgrades, zero up-front cost, etc. Consumers mostly don't care about that message, so Web 2.0 companies don't talk about it. Enterprise software companies need to talk about how the technology they are employing creates those benefits for the customer, so they do.

However, it appears that the two camps (consumer and enterprise) are using a lot of the same underlying technologies. Both use Agile-style development methodologies, and both use the same general set of development platforms and languages.

The central premise of Pure SaaS is that the applications are web-native - a fact that is taken for granted by consumer companies. So, in a way the consumer companies realy are SaaS companies, they just don't think of it that way. 

On the other hand, enterprise companies are presenting their customers wth dynamic web pages featuring collaborative elements, mashups, and  user-centered design - that all sounds suspiciously like Web 2.0 to me!

One person I spoke to said he thought the functionality and feature sets were the same for consumer and enterprise; it is just the business model that is different!

Here's a good article from info world on this topic. (I found the article thanks to Holger Eggerichs)

I'd love to hear your thoughts on all of this...