Opportunities in the SaaS Market - Only for the Industry Heavyweights?

As I am working to launch a SaaS startup, research from such esteemed companies as Gartner and Forrester shows that as of last year CIO's were more inclined to purchase a SaaS application from a well known brand name. Of course, IBM, Oracle, Microsoft and others come to mind and are, in fact, the focus of much of this research. Ironically, while the first iteration of Saas (ASP) was driven by startups and failed more to technological limits than anything, the SaaS wave seems to be driven by the largest software vendors.

I am interested to hear from folks who are familar with IT adoption and what you think is the future for SaaS? Will it remain the domain of the big boys or will startups prosper as Salesforce.com has? Also, what criteria do you see IT managers using to determine which SaaS vendor to use? And lastly, what unintended pain is being created by SaaS?

I look foward to a dialog on this topic.

Tom

__________________________