Gartner vice president Bob Hayward said larger companies today are less likely to consider following a "software as a service" model because of existing infrastructure.

But, he said, it is ideal for smaller companies. "The difference with large companies is they cannot adopt their own processes and do not see software as a service as attractive because it costs them the ability to customize generic applications," he said.

Hayward added that licensing issues bought on by virtualization, dual core processors and grid computing experiments is putting the stress on vendors for appropriate software licensing, and forcing major software vendors to seriously consider worldwide fixed pricing.

"Look at Salesforce.com, which pretty much gave Siebel a bloody nose through charging customers based on actual usage metrics - this is going to become much more widely accepted."