Clayton Christensen in his book Innovator's dilemma argues that disruptive innovation:
"offers less of what customers in established markets wanted and so could rarely be initially employed there. It offers a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream."

The success of Salesforce.com on cloud against established leaders like siebel reinforces the very same idea. For SMBs, having sensitive data (i.e. leads & prospects) on cloud is better than losing them in sales people's laptop, when they move from one company to another.

Similarly, for most companies across the world, ERP & payroll are the only processes that are automated. Other than these two, there is a long list of applications that are not yet automated. At OrangeScape, we call these applications as the longtail apps. Unavailability of these applications will fuel the adoption of cloud, even if cloud is not as reliable as its on-premise applications.

http://manidoraisamy.blogspot.com/2010/12/cloud-computing-being-inferior-is.html

Success of Salesforce (web-based CRM and sales lead managements) has absolutely nothing to do with cloud computing. In fact, most of what Salesforce does has nothing to do with cloud computing. Using the same "logic" one could call every web-based company a "cloud success story". 

Very, very, very few companies today can be called successfully because of cloud-related technologies.

Nikita Ivanov.

GridGain Systems

"Cloud Computing Made Simple"

SaaS has everything to do with cloud, if it needs to successful. It is characterized by multi-tenancy, pay-by-use and unpredictable growth & hence the architectural characteristics of cloud - statelessness, distributed storage (NoSQL) & map-reduce:

http://manidoraisamy.blogspot.com/2010/03/scalability-is-not-problem-scalability.html

On the other hand, cloud is starting to create new SaaS/business model opportunities due to the economy that it offers (that goes beyond the initial architectural characteristics). That is the purpose of this article.

I dont want to be a mouthpiece for Salesforce. But to think that Salesforce.com (& force.com) has nothing to do with scalability (or SaaS/cloud characteristics) is just undermining the traction (& pioneering) it has created for cloud.

I don't want to argue the details - but the confusion over SaaS/PaaS/cloud is extremely wide spread. SaaS defined as a web app with per-usage pricing model, and clouds are hardware virtualization and data center automation - and that's it (in basic terms). SaaS apps may or may not run on the cloud - and majority of today SaaS apps don't run on the cloud (but rather inside of traditional data centers). This will change, of course. But SaaS has nothing to do with clouds as enabling technology or vide versa - they are both developed independently - but likely to converge at some point in the future. 

Just the fact that some SaaS apps run on the cloud - doesn't make them anyhow connected or required for each other. 

Nikita Ivanov

GridGain Systems.

True. the confusion is wide spread. Partially, because of vendor's intent to ride cloud's hype wave. But more importantly, due to multiple technology approaches to the same objective.

• Scalability - for example is solved by distributed datastores/NoSQL by some and SQL scaling by others - like what salesforce.com has done on top of oracle.
• Multitenancy is implemented as virtualization in IaaS, entity cluster/partition keys in PaaS, db columns/queries in SaaS.

That makes the definition of cloud little loose in technology terms. We will have to wait to see what technologies will standardize at the end. However, the objectives of cloud - multitenancy, scalability, pay-by-use & elasticity should be agreeable to everyone, IMO.