Bill McNee has written a great article entitled Get Ready for SaaS 2.0.

He begins by saying "A new study reveals seven key trends as software-as-a-service evolves beyond its current focus on cost-effective software application delivery toward an integrated business service provisioning platform."

Bill is completely right. Cost isn't the key issue. The main selling point for SaaS is a massive jump in productivity.

SaaS is a form of out-sourcing. As Thomas Friedman says in Flat World, you don't out-source to save money, you out-source to win.