Industry pundits are pondering the scalability limits of enterprise applications delivered on-demand.

Case in point is has had great success in small to medium sized business (93 percent of customers had fewer than 500 users). But can they scale to 10,000?

… in a May report based on data from 29 customers, Nucleus Research raised questions about whether the vendor could support enterprises with more than 2,000 users. Noting that many large companies are reference customers, the report found that most use the vendor "on a divisional or regional basis and did not have more than 1,000 users.

Cisco plans to scale to 10,000 seats, but currently only has about 1,000 user live on the CRM.

Technology at that scale is one limiting factor:

Wettemann says it remains to be seen whether on-demand software is scalable enough for large customers. One issue, she says, is bandwidth, a concern when you have "lots of users hitting a remote database somewhere."

Perhaps even more challenging than the technical scalability challenges are the end user conversion issues. Change comes hard to many people. In Cisco’s case:

…many sales people are simply reverting to their legacy nonhosted CRM applications, to which they still have access… 

Read full article at C|Net: On-demand applications face growing pains