SANTA CLARA, CALIF. -- In what has become a familiar theme for online CRM software vendor salesforce.com, company Chairman and CEO Marc Benioff on Friday stressed that the days are numbered for huge, in-house software deployments.

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"The world is changing. The world is changing very quickly," Benioff said during a presentation at InfoWorld's Next-Generation Web Services II: The Applications conference here.

Benioff stressed that more and more applications will be outsourced. "Enterprise software and software as it exists today will be completely gone" by 2012, he said.

Software is moving to a utility model in which enterprises outsource software applications, similar to the way that the hotel where the conference is being held outsources services such electric power, telephone, water, and sewer services, Benioff said.

"I think this fundamental shift that's happening now means that you're going to see everything become a utility," he said.

"Every Web site that's out there is really a service," said Benioff.

He compared having in-house software deployments to having "an outhouse and you manage it and maintain it."

Panelist Patrick Grady, CEO of Talaris, concurred that "software as a service is inevitable," given current enterprise budgetary restraints on IT spending.

Businesses, he said, "don't want the school bus pulling up with all the Accenture kids," referring to the cumbersome IT services needed for deploying enterprise applications in-house.

But Grady added that a hybrid model is needed for application services. "There has to be some level of control on the other side of the firewall."

Audience members questioned the notion of software as a service, asking whether ASPs were offering anything new and expressing concerns about what happens when an ASP goes out of business.

"What I'm hearing so far is there's nothing new out there, just that ASPs are making progress and it has nothing to do with Web services," one attendee said.

Responding to fears about ASP failures, panelist Rodric O'Connor, CTO of investment banking firm Putnam Lovell, said his company maintains a copy of its corporate CRM data every week.