Software Appliances were initially created for high performance network and security infrastructure with lower administration costs. Over time the Appliance model moved up the stack from email appliances to a diverse set of business applications. This trend has continued in parallel to the rise of SaaS and Cloud Computing. SaaS Appliances provide pre-configured, self-contained applications with on-premises deployment that
can be automatically updated and upgraded. While the Cloud is the center of attention these days, SaaS Appliances have been quietly evolving up the stack while adapting the best of web-oriented architecture for clouds inside companies.
Whenever there are security or regulatory constraints that demand on-premises deployment, SaaS Appliances can deliver where the Cloud cannot. While several years from now these constraints may change, this is the reality for many enterprises and government agencies. Any SaaS vendor who does deliver both Cloud and SaaS Appliance deployment models from a single image of their software is simply reducing their total addressable market.
Compared to traditional on-premises software, SaaS Appliances provide rapid deployment that shortens technical pilots, fast upgrade cycles without degrading service level and a lower Total Cost of Ownership (TCO).
Combined with subscription business models that let the enterprise right-size the deployment, the ability to deliver or turn on additional applications (e.g. upgrading a Microblogging Appliance to a full Social Software Appliance) provide the flexibility and fit for adoption concurrent with business value.
Traditional enterprise applications such as CRM or ERP will move to the Cloud, but not just because a customer chooses the Cloud over traditional deployment. The Cloud will come to them. For example, I can’t wait for a customer to migrate apps and users to the Cloud so we can enable the integrated value proposition of Social Software working across organization and application silos.
(Cross-posted @ Ross Mayfield's Weblog)