Could SaaS + PaaS Equal Cloud Computing Gold?

Microsoft this week rolled out its CampaignReady suite of services, which is anchored by the Windows Azure-hosted TownHall service. Designed for political campaigns, the suite works by letting candidates connect with constituents via TownHall, while Microsoft’s online collaboration and advertising tools help campaign workers communicate with each other and spread their messages.
Technology and online engagement helped set President Obama’s campaign apart from campaigns past, so it stands to reason that future campaigns will try to emulate his success. Especially for local or regional campaigns without the resources to build the specialized tools Obama utilized, Microsoft’s pitch — a prepackaged solution that can be set up, torn down and paid for on demand — should be appealing. But Microsoft’s SaaS-plus-PaaS business model has legs beyond politics, and beyond Redmond.
The combination of cloud services designed for and hosted on cloud platforms seems like a surefire strategy to secure PaaS (or even IaaS) adoption. Most cloud providers tout the promise of their respective offerings and point to standout case studies. But there is no guarantee that prospective customers will buy the sales pitch. If they do buy in, there is no guarantee that willing customers have the development skills to write applications that fully capture the benefits of cloud computing.
By creating targeted applications designed specifically for use on their platforms, cloud providers can increase the likelihood of bringing customers into the fold (and can increase their profit margins, as well) by letting applications help sell the platform instead of relying on the platform itself. According to some surveys, at least, businesses presently find SaaS significantly more palatable than straight-up cloud computing.
The possibilities are exemplified by the number of customers using its platform. According to the company, it has more than 72,000 customers for its flagship CRM offering, which sits atop the platform. Presumably, it was positive experiences with the SaaS application that inspired more than 200,000 developers to build more than 135,000 custom applications that run on It’s possible could have attracted such a large base as a standalone offering not intrinsically connected with’s SaaS business, but it’s unlikely.
The issue for most cloud providers, however, is figuring out how to develop an application strategy to complement their infrastructural competencies. Microsoft, on the other hand, brought its decades of software experience with it when it launched Windows Azure. It developed its Pinpoint marketplace of third-party applications ready to run on the platform, it partnered with business-friendly ISVs like Intuit, and now it has gotten into the SaaS act itself with TownHall. Azure has garnered its fair share of praise, and if Microsoft continues down the SaaS path, Azure could garner more than its fair share of customers and dollars.
If it is indeed worth other cloud providers’ efforts to expand their SaaS presences beyond exchanges or marketplaces that rely on third parties, the question is which providers are best equipped to do it. IBM certainly could do when it rolls out its rumored production-ready cloud platform, and Oracle could have done the same had it not killed the Sun Grid. Perhaps Google will tie future business applications to its App Engine offering. Maybe could expand its footprint beyond the CRM and collaboration markets and open up to broader development efforts. But can cloud-first providers like Amazon Web Services or Rackspace develop meaningful SaaS offerings? Do they have to?

Question of the week

Is SaaS-plus-PaaS a viable business model for cloud providers?