The problem with Netsuite and Salesforce.com is their business model. For instance, until last year Netsuite's sales-and-marketing expenses exceeded its revenue. In the most recent quarter, netsuite spent 78% of it's revenue on sales,marketing, and administrative expenses. And it still lost money.

So, Netsuite's customers aren't paying for software with a side of salespeople, they're paying for salespeople with a side of software.

If Netsuite and Salesforce.com's financial statements are the rubric by which we can judge the SaaS business, then it seems that SaaS is an inferior business model to traditional packaged software.

Someone needs to fix the SaaS business model to mitigate the sales-and-marketing expenses.

This is the sort of unsexy startup more hackers ought to think of starting.

This is good news for the enterprise side of the web software business. Now there are fewer reasons for wimpy CIOs to avoid using on-demand software suites, if both CRM (Salesforce) and ERP (NetSuite) are online.