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The software as a service (SaaS) model of IT deployment – whereby business applications are housed in a remote, third-party datacentre and accessed via your web browser – is becoming the de facto way of doing business.

That was the claim of Marc Benioff, CEO of on-demand firm Salesforce.com, the poster child for the SaaS movement. “The biggest customer relationship management (CRM) transaction of 2007 was at Citibank and all the usual vendors were involved. We were chosen.,” he said. “We have been speaking to some of the largest and most interesting CIOs in the world. They are all going through their stack of applications and looking to move to SaaS. Believe me, that train has already left the station.

“The IT department is evolving When I started in the industry, the IS or the MIS department was all about executives who would go out and make technical decisions. They were interested in working on computer and writing their own software code. Then we had the chief information officer, but it was still about hooking up the wires and writing the custom software. Now we see the chief innovation officer. The next generation of CIOs will be more focused on innovation and not on infrastructure.

“We have all been told or hypnotised or brainwashed into thinking that we need a ton of servers and databases and that we need to integrated them all in a stack to make it work. It's a lot of work and it's a difficult path. The Cloud empowers every developer. Web 3.0 leverages the infrastructure of the internet to run your applications. Software is over. The whole concept of traditional packaged software built on a vertical stack is gone forever. We will come back in 2019 and we'll talk about how far we've left those software-based platforms behind. Applications will be built on the Cloud. We are a driver of that change and an evangelist of that change.”

So despite the positive message, Benioff seems determined – like NetSuite's Zach Nelson – to foist the term 'cloud computing' on a confused business community, as Chris Middleton in our Editor's blog discussed the week before last, here.

Benioff was in London for the inaugural Dreamforce Europe, the company's brand of user and developer conference that has previously only been staged in the firm's home city of San Francisco. The move to launch a European version is indicative of the importance that Europe plays in the growth plans of firms such as Salesforce.com and as the next front in the war with the traditional software vendors, such as SAP and Microsoft. Some 2,200 people turned up on day one at the Barbican Centre in London, to hear keynote addresses – including from musician, technologist and human rights campaigner Peter Gabriel (see this week's Editor's blog) – and attend conference sessions from an agenda of 50-plus options.

It's an important milestone in Salesforce.com's evolution. Rival firms such as SAP have stalled with their own SaaS offerings, while Microsoft only makes their version available to customers with a US zip-code. Of the SaaS start-ups, RightNow has a much smaller scale user conference, but rival NetSuite still has no UK user conference (or a US one, come to that!). There is a good opportunity for Salesforce.com to establish the same thought-leadership and mindshare in Europe as it has in the US.

It is clearly a big business opportunity as SaaS implementations in Europe are set to boom. For example, overall growth of on-demand CRM applications is expected to grow by 41 percent over the next three years, with Europe and Asia leading the charge. According to a new report from Tier1 Research, the on-demand CRM market is expected to grow by a compound annual rate of 41 percent over the next three years, driven primarily by small and midsize businesses (SMBs).

Salesforce.com passed 7,000 customers and nearly 140,000 subscribers in EMEA in the first quarter of 2009 with new customers including the likes of The Christie Group, CODA, COLT Telecom Group, DSV, Rentokil Initial and Wartsila. Globally Salesforce.com has 41,000 customers, so EMEA is still a relatively small contributor in real terms, but the growth potential is enormous. “Salesforce.com EMEA out-paced industry growth rates with 69 percent year over year revenue growth and 70 percent Q4 08 revenue growth compared to the same quarter a year before,” said Lindsey Armstrong, co-president of Salesforce.com EMEA. "Business decision makers are realizing that this is the era of SaaS. It's also the case that two of the biggest customers – Japan Post and Misys – are non-US customers.”

The firm has allied itself closely with Google in its growth, almost too closely at times perhaps as rumours that Google will buy Salesforce.com pop up with mononous regularity. But as Benioff quips: “The enemy of my enemy is my friend – and that makes Google my best friend.” The enemy in this case is Microsoft and its office productivity software such as Office, Excel and Outlook. Earlier this year Salesforce.com signed a deal with Google to resell GoogleApps, giving the free 'Office-alternatives' a channel into the corporate environment. “In two weeks, we have seen 2,000 Salesforce.com customers turn on the GoogleApps option,” said Benioff. “At Salesforce.com we have now decommissioned Office and Outlook and so on and are moving over to GoogleApps.”

For its part, Google clearly sees an alliance with Salesforce.com as being advantageous. “We are in the position of being a generation in the middle of a transformation,” said Nikesh Arora, European president of Google. “It's sometimes difficult to see where you are when you are in the middle of an reinvention. I remember back in 1995 getting a broadband connection from AOL and the biggest innovation that we had in business was that I could now send email to someone outside the company. That was new. Now we couldn't live without email.

“When Google started, there were 350 million people connected to the internet, with 30 million of them on broadband. Now we have 420 million connected to broadband. How many people could live for a week without broadband at home? When something goes from being nice to have to have to have, that's when you understand that something has become ubiquitous. The trend of cloud computing is inevitable.”

Inevitable? Probably. From the point of view of 2,200 people this week, it's certainly a compelling proposition. It's also - theoretically - a relatively recession-proof technology option. Some of the main selling points for SaaS are ease of deployment, coupled with ease of use and reduced upfront cost as you pay as you go for your software usage. So not only do you not have to cough up a huge amount of money upfront for software that you might not end up using, but you can also switch it off and stop paying if you don't need it any more. That kind of flexibility is very enticing in a time of tightening budgets and uncertain economic conditions. For the hard-pressed CFO at UK Plc, the idea of a flexible SaaS implementation as opposed to a high cost, rigid outsourcing deal must look very interesting.

A new study published today shows that UK colleges are responding to the huge demand for education from China, India and other booming economies.

53,000 international students study at UK colleges - with Chinese and Indian students topping the league.

The Warwick University Study shows that the majority of students taught by UK colleges are from China (3,500) and India (3,300).

Julian Gravatt, director of Funding and Development for the Association of Colleges, which commissioned the report, said;

“The growth for the world’s fastest growing economies is outstripping their ability to teach their workforces. UK colleges are actively responding to this need. They’re forming new partnerships in the world’s most important markets, taking our own expertise in skills training to areas of the world where it is most needed.”

UK colleges around the globe:

* London Beijing Colleges partnership - London colleges providing skills training and curriculum development for the Beijing Olympics.

* Preston College providing knowledge exchange and staff training in Omsk, Russia

* Blackburn College developing expertise and skills training for the textile industry with South Delhi Polytechnic, India.

The report says:

• There is huge demand for education and training in India and China.

• China is seeking help internationally to expand and overhaul its further education system.

• Expenditure of GDP on education in India set to rise from three to six per cent.

• 50% of colleges see foreign expansion as a key future opportunity

• UK colleges’ key exports are English Language teaching, Business administration, Engineering and IT.

• UK education is most attractive for having a good international reputation, offering all teaching in English and being quality assured.

• UK Further Education’s strengths are its qualifications - that reflect industry’s needs, innovative curricula, a wide range of courses, flexible course delivery, a strong emphasis on independent learning and a good track record in international activities

Key recommendations:

* There needs to be better marketing and promotion of UK colleges, skills training and qualifications in foreign markets.

* There needs to be better joined-up working between government and UK colleges, to increase economies of scale and support expansion abroad.

* The recommendations of the Foster and Leitch reviews should be implemented to give UK colleges parity with their EU counterparts.

* UK qualifications need to be made more transferable and more widely accepted around the world.

Compassion fatigue was a term popular in the late 80s and 90s, in the wake of Live Aid and all its offspring – the wave of socially responsible, human-rights-centred creativity that followed it. This was swiftly followed by 'compassionate muso' fatigue, as the likes of Sting and his (recently zero rated) rainforest campaigns soon became tarnished by the impression that they were looking at a smoke-tinted world from the clean air of a limo headed fast uptown. We became suspicious of water-walking multi-millionaires such as Bono et al who appeared, at least, to be remaking the world in their own ego-sphere.

An exception has been Peter Gabriel, largely because his understanding of the transformational human potential of technology has been allied with a quiet determination to prove it, rather than be adored for it. He was inspired by his father, who had a vision for on-demand content delivered via the analog telephone in the early 1970s.

'Telephone' means 'far voice' and sometimes distant voices can be the most inspiring, if only we can find a way to hear them. Gabriel has inspired enough people to recently (and quietly) receive a Nobel prize.

Gabriel's projects have been as varied as online music delivery services OD2 and We7 on a commercial basis, and Witness, the Hub, and the Elders on a humanitarian one. The Hub is essentially a human rights YouTube, and Witness is the surrounding organisation. The Elders, meanwhile, is an international group of respected figures, including Jimmy Carter, Nelson Mandela, Desmond Tutu and others, who act as 'the elders of the global village' to address our more intractable local crises. While the latter is a flawed and romantic idea, the Elders have influence because they are people who, once again, it is hard to put down the telephone on.

Today, compassionate CEOs are the order of the day, so it was no surprise to find Gabriel sharing the Dreamforce Europe stage in London with its host, Salesforce.com CEO Marc Benioff.

Benioff's Salesforce.com Foundation is behind the '1/1/1' corporate social responsibility message – donating one percent of time, one percent of product, and one percent of equity to good causes. (They've recently added another '1' for '1 with the earth' [sic], but that may be over-cheesing the world cuisine; but then again, calling it 'OneWorld' would have inspired a writ from NetSuite).

Witness and The Hub have benefited from the Foundation's work in terms of donated equity and product, and the London Dreamforce event gave them one percent of Gabriel's time to talk about it.

In conversation with Gabriel, Benioff said: “All the wood is coming [together] behind the same arrow” in terms of technology's potential to change the world meeting people's desire for humanitarian change. Gabriel said of the mobile phone: “For the first time we have to potential to put anyone in the world in touch with anyone else, and what are we going to do with that?"

Asked how real such change could be, he added: “How can you solve a problem like all the starfish washed up the beach? Well, if you can throw one back it makes a lot of difference to that one, and then to that one, and then to that one...”

So why am I telling you all this? Because it occurs to me that the outsourcing industry in particular should be the one to take up Benioff's challenge to donate one percent (or more, much more) of employee time, corporate or personal equity, and product (or service) to causes that benefit local communities.

It's hardly a difficult message, after all.

Far more companies than governments seem interested in environmental transformation, for example, and our industry, with its global reach and deep links with emerging economies could really make a difference by pouring funds and time back into communities and humanitarian projects that need both.

I will be speaking to Benioff in the near future and will ask him to share his views with sourcingfocus.com about the specific ways in which this forum can help – not him, but to set up that kind of initiative within other companies and organisations and to make it work as an agent for change.

Wouldn't you and your company like to be involved with something like that?

• In an ironic demonstration of the risks of using hosted services, the servers hosting Peter Gabriel and the affiliated WOMAD and Real World websites were stolen from Gabriel's ISP on Monday morning.

The Hub

Witness

The Elders

Salesforce Foundation

The Bank of England has opted to ignore commercial pressure and leave interest rates unchanged at five percent in an effort to keep a lid on inflationary pressures. The European Central Bank has also left rates unchanged at 4%.

India’s outsourcing industry will provide an additional eight million jobs over the next decade as smaller cities grow in prominence, according to industry association, Nasscom.

The report, which looked at India’s top 50 cities for IT and business process outsourcing (ITO and BPO), predicts that less well-known outsourcing destinations in India will create approximately two million of these jobs.

Currently 90 per cent of the industry's workforce are based in India's top seven ITO and BPO cities but the report says this will drop to 75 per cent over the next decade as employers turn to smaller alternatives.

The seven key centres, such as Bangalore, Chennai and Hyderabad, are becoming overloaded with new graduates and employees, meaning that the industry needs to encourage smaller cities such as Amedabad, Coimbatore and Visakhapatnam to come to the fore, according to the report. But it says the government needs to begin building infrastructure and education facilities in the smaller cities to underpin this future growth.

Speaking about the rationale of the report, Mr.Som Mittal, President, NASSCOM said, “The development of only a few select set of cities has put severe pressure on the infrastructure, costs and also increased migration of resources. We see immense potential in the next set of locations if the right steps are taken now. The growth projections of the industry indicate that even the seven existing centres will see significant growth, however would need proactive planning and meticulous execution to support this growth.

The Sri Lanka Export Development Board (EDB) will launch an Export Coaching Programme for IT outsourcing companies in order to help them locate and retain customers in the EU.

The programme, to go live mid 2008, will seek to identify and benchmark strong service providers in Sri Lanka to introduce them to the European market, providing matchmaking and promotion opportunities whilst aiding European end-users in their offshore outsourcing buying decisions.

While the Sri Lankan ITO industry has shown steady growth in the last few years, according to Central Bank statistics, IT services exports total just US$182 million. The programme will encourage small to medium sized Sri Lankan IT enterprises to promote themselves to the European market and increase the prominence of the country as an ITO player.

Capgemini UK plc has won a five-year contract to provide IT services to C.Hoare & Co, the UK’s leading independent bank. The contact, starting in June 2008, will see Capgemini provide 24/7 datacentre services from a UK delivery centre.

The bank says that its contract with Capgemini will improve the cost-effectiveness of its IT support, provide access to the expertise of a global leader in technology and outsourcing and enable valuable space occupied by computer facilities at its Fleet Street headquarters to be made available for other business activities.

Alexander Hoare, chief rxecutive of C.Hoare & Co, said: "Our strength as a bank lies in our provision of first-class personal service to our clients backed by high levels of efficiency and excellent data, and we are confident that working with Capgemini will maintain and enhance the IT service which provides vital underpinning for our work."

• See News Analysis for more on Capgemini, including its latest results, announced this week.

Thomson Reuters has signed off on a contract that will see BT manage its wide area network (WAN) infrastucture for the next eight years.

BT will work to transform Thomson’s existing technology into a high-speed, IP based global infrastructure that will encompass 323 locations across 100 countries including six applications hosting data centres.

The new contract follows a 10-year deal BT signed in 2005 to transform and manage Thomson Reuters global financial services information network.

Peter Moss, MD of content, technology and operations, Thomson Reuters, said: “Thomson Reuters is absolutely committed to gathering and providing high quality information to meet the needs of our demanding markets. To do this effectively we needed to support our people with a world class, efficient and well managed internal network. Having worked with BT for a number of years now we are confident they can execute against our requirements wherever in the world they may be.”

CODA Group, the finance systems specialist, and software as a service (SaaS) tyro, salesforce.com today announced the availability of CODA 2go, the first on-demand financial system built entirely on salesforce.com’s Force.com 'platform-as a service'.

The first release delivers Opportunity to Cash functionality, enabling users to go from the 'opportunities' in Salesforce to create an invoice at the click of a button and post the transaction to their sales ledger. It is fully integrated with salesforce.com’s CRM application and aims to help companies manage business processes. The system was launched today at Dreamforce Europe, salesforce.com’s European User and Developer Conference at the Barbican Centre in London.

• Salesforce.com passed 7,000 customers and nearly 140,000 subscribers in EMEA in the first quarter of the current financial year.

Finjan Inc has announced its discovery of a server controlled by hackers (Crimeserver) containing more than 1.4 Gigabyte of business and personal data stolen from infected PCs. The data consisted of 5,388 unique log files. Both email communications and web-related data were among them.

The compromised data came from all around the world and contained information from individuals, businesses, as well as renowned organizations, including healthcare providers, said the company.