This week caps off two interesting technology conferences for me that were, unlike most of the others that I attend, not geared toward customers. The Goldman Sachs 2008 Technology Symposium in Las Vegas earlier in the week was aimed at, you guessed it, investors. The OpSource SaaS Summit here in San Francisco Thursday and Friday is for ISVs.

Here's the striking similarity I found in both camps: groups of people interested in finding the money trail with software as a service, either as an investment vehicle or as a revenue stream. People I spoke with informally--in the halls, at breakfast and lunch, in the elevator--all seemed interested in the same things: staying on top of emerging trends in the fast evolving world of SAAS--not missing a thing seems critical--and finding out how to make money with SAAS applications, whether that boils down to an architectural, platform or sales and marketing discussion.

In the confines of those conversations there were a few other themes that emerged--where open source and SAAS converge, the blurring of SAAS and SOA, which platform approach is the best--but the bottom line seems to be this: SAAS is no longer coming. It's here. The next step for investors and ISVs is to figure out exactly how to get on board in a way that is both scalable and affordable, in terms of time and money invested.

Colleen Smith, vice president of SAAS at Progress Software, a huge application infrastructure provider for ISVs that has taken the leap over to the SAAS world (and adds about 60,000 SAAS users to their ISV applications a year) gave a pretty compelling presentation that really pinpointed some critical elements ISVs need to think about to start building revenue.

"In order to be able to monetize what's going to be required in that next wave of SAAS platforms is [functionality] that enables active interaction driven by a community of users that need access to [your] content, along with governance [and the ability to] manage and monitor who is using your service, how its being used and, more importantly, how you can measure and monitor the use of your application and how you get paid for it. Because that's how you're going to make money. If you're just offering services for free, you're going to have a little bit of a problem in terms of how you get money."

Secondly, Smith suggested ISVs need to develop an ecosystem--or vertical business network--and then build out applications around specific vertical functionality and processes.

"I tell our ISVs [to] take a step back. You figure out the integration environment, you figure out the workflows and the business processes that need to be there for the X,Y,Z industry, you build out the integration and offer that as a service," said Smith. "What's your advantage? Number one it makes you a differentiator of domain expertise. Take all that information you have and build it in to your business applications, then you move away form that whole concept of having to customize. Then just figure out who is going to host it, who's going to manage it, and then how you're going to make money. That comes down to your pricing model. That's a lot easier to do than just trying to go out on the street and go it alone."

As for Goldman's advice to investors, here's a snippet from its report "Getting SaaS savvy--successful investing in on-demand":

"SaaS is one of the most important trends in software at present, and will become pervasive over the next several years. ... As such investors will need to understand this delivery and business model to properly assess the impact on the full gamut of software vendors. ... We expect SaaS to expand the total addressable market for enterprise application software, with growth in SaaS outpacing growth in the overall software market for the next three to five years."

That "understanding" means finding the money trail. Because when software companies make money, investors make money and the whole thing works. Well, there's the customer satisfaction angle too, but that's another story.