I've always had a beef with pure-play software-as-a-service (SaaS) vendors, the ones that have basically taken an existing on-premise function, such as CRM, and flipped it into an on-demand model. The problem with this model is that, once the novelty wears off, these SaaS offerings become more and more commodity-like, and their chief differentiation boils down to price.

This has made the early SaaS business a little boring for anyone looking to deploy something truly innovative at a functional level. SaaS 1.0 was about innovating at the purchasing, deployment, and maintenance level — as in monthly per user fees, no internal IT resources needed — but it had nothing to do with delivering new business services and functionality above and beyond what was already being done on-premise.

I'm happy to report that SaaS has started to get exciting again, thanks largely to innovations I call SaaS 2.0 The basic premise is this: By accumulating users, customers, business processes, and industry knowledge in a single place — the proverbial computing cloud — SaaS 2.0 providers can start to offer services and functionality that could never be delivered on-premise for love or money.

Many of these new opportunities appeal directly to manufacturers looking to improve product quality, on-time delivery, supplier management, and the like in the face of an increasingly interconnected, global manufacturing environment. Indeed, one of the things SaaS 2.0 is particularly good at is leveraging the growing need for connectivity across businesses by acting as a repository or clearinghouse for improving collaboration and, in the process, opening up new business opportunities.

What this means is that some grand, old problems — such as supply chain management, logistics management, and warehouse management — are starting to have SaaS 2.0 solutions that vastly expand on what has typically been served up to users on-premise. The results are new functionality and opportunities poised to change how we think of these somewhat tired concepts.

Trade logistics is one of my favorite examples. What is truly innovative regarding trade logistics in a SaaS 2.0 model is the vastly improved logistical functionality now possible due to the accumulation of a never-before-assembled quantity of information and resources in a SaaS site. And as the number of providers, suppliers, customs brokers, and customers on the site grows, the offering increases in value.

Similar opportunities are seen in nascent SaaS 2.0 offerings in warehouse management, business intelligence, online billing, and accounting, among other areas. The network effort of pulling together a business community's needs, interests, and intellectual property into one site, and then leveraging those assets to the benefit of all with new kinds of analysis, relationships, and business opportunities, makes SaaS 2.0 a significant improvement over both SaaS 1.0 and on-premise 20.0 — or whatever generation on-premise is up to.

This is the key to understanding the SaaS 2.0 opportunity: better value and never-before-seen functionality, all with the ease of use of an on-demand model. With this opportunity for greater value, the SaaS 2.0 revolution promises to be a much more significant event than SaaS 1.0 ever was — which, if you ask me, is just fine. SaaS 1.0 is already yesterday's news.