While there are still some people who consider SaaS a passing fad, the latest developments on the Software-as-a-Service (SaaS) front certainly proves that SaaS is here to stay with a growing future.
While there are people, who consider SaaS a passing fad, the latest developments on the Software-as-a-Service (SaaS) front certainly proves that SaaS is here to stay with a growing future.
The Role of SaaS Is Growing
I guess it is not a surprise for industry insiders that Gartner and many other research organizations are reporting that the use of SaaS is growing. When one thinks of all the advantages SaaS has in terms of costs, ease of use and overall efficiency, it is only logical that more and more organizations of all sizes are embracing it. Sure, there are cases, when using SaaS is not recommendable (i.e. for applications, which require heavy customization or when security and control are of paramount importance) and if anybody expects that 100% of all organizations will ever use SaaS, this might never happen but it is a fact that more and more companies (and organizations in general) of all sizes use SaaS in one form or another.
According to a research by AMI-Partners “21 percent of small businesses and 31 percent of mid-size enterprises use SaaS solutions today—double the percentage of just four years ago.” This is totally in line with Gartner's forecasts that “Worldwide software-as-a-service (SaaS) revenue in the enterprise application markets is on pace to surpass $6.4 billion in 2008, a 27 per cent increase from 2007 revenue of $5.1 billion”. It is obvious that this is a lucrative market any data center would like to enter (if they are not already there) or to expand their SaaS offerings in order to generate more revenue.
SaaS is a real cash cow for those data centers, which know how to use it. What is more, the upward trend in SaaS usage is expected to continue in the next few years as well and again as per Gartner's predictions, the use of SaaS will more than double by the year 2012. This is really an opportunity (stand-alone) data centers can't afford to miss!
Is the Economy Doing SaaS a Favor?
In addition to the undisputed advantages of the SaaS concept itself, there might be another very important factor for the increased adoption of SaaS in the recent years – the poor state of the economy.
When organizations are pressed to cut costs, it is easier to decide that renting software (i.e. using SaaS) is more feasible than paying hefty amounts of money to buy it. Since the economic outlook for 2009 (and some economist say that the recession could go into 2010 as well) is far from bright, it can be expected that the cost-cutting benefits of SaaS will be even more of a factor for companies to adopt SaaS or to expand their SaaS adoption even further. This is the best news about the economy I have heard in recent months!
More SaaS-friendly Products Are Being Released
Cost-savings might be a major reason for many companies to turn to SaaS or to increase its adoption but they are certainly not the only ones. SaaS offers are improving all the time and this makes them more attractive. There might be many growth-related mistakes by SaaS vendors but generally the SaaS industry is not that young anymore and many of the issues, which plagued its infancy, have already been sorted out.
One of the most significant improvements to the SaaS model is the fact that more and more SaaS-friendly applications are offered by vendors. Even if the applications are not principally new, their latest versions are more SaaS-friendly (I hope this is not accidentally) and this certainly helps to make SaaS more lucrative. It seems that software vendors are becoming aware of the potential benefits the SaaS model gives them and that is why they start to develop SaaS-friendlier applications.
SaaS can be used for all kinds of databases and database applications (which are a large portion of Web applications). For non-technical users this translates as CRM, HR, or ERP packages, which generally are neither cheap, not always straightforward to install but when used as SaaS, these technical intricacies are hidden for the user. Office suits are also another SaaS-friendly group of applications and there has been a significant increase is the SaaS-ability of office suits, mainly the Google offer. Maybe it is an exaggeration to say that SaaS applications will make desktop applications obsolete but it is a fact that the rise of SaaS office suits has increased dramatically over the last year or two.
Does Open Source Trigger the SaaS Expansion?
Open source is everywhere in the data center and SaaS is not an exception. The advantages of open source are well-known and it is logical that the use of open source for SaaS offerings is substantial. Due to the fact that most open source applications (operating systems, servers, databases, enterprise applications and end-user applications) are very reliable and free, open source has made its way into SaaS. And what is more – if there weren't so many and good open source applications then the adoption of SaaS would have been much slower. The prices for SaaS would have been higher and the reliability would not have been that good.
In fact, open source software has a dominating role in SaaS and its share will continue to increase. According to Gartner, “By 2010, 90 percent of software as a service (SaaS) providers will have some open-source component in their technology infrastructure stacks”. Open source has always been popular in most data centers and it is not surprising that its popularity spreads in the SaaS area as well.
If open source continues to provide the solid SaaS foundation, it can be expected that SaaS will soon become a dominating model for doing business. SaaS has a sound economic foundation and it offers many benefits to small and large companies, so SaaS is a safe bet for data centers. 2008 was a good year for SaaS and chances are that the positive developments will continue in the future as well.
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