SaaS for the Masses? Software as a Service On the Rise.

An independent research company released a report on how quickly Software as a Service was impacting businesses around the world. Personally, I can’t wait until online service providers come up with a standard way of describing online software – SaaS or On-demand or online software, etc

“We’re seeing breakthrough levels of SaaS acceptance across all categories of business software – from SMBs to the largest enterprises worldwide. Gone are the early days where SaaS was primarily a business-unit driven phenomenon. Today, IT is now actively engaged in building hybrid architectures that leverage the best of web-based applications, with on-premise enterprise software – especially as SaaS increasingly addresses mission-critical workload requirements. At the same time, much of this growth is coming without any sort of plan or management structure,” states Saugatuck VP Mark Koenig, head of the SaaS research program and co-lead author of the new report.

Some notable points:

• Twenty-six percent of companies now have at least one SaaS application installed, up from 11 percent at the beginning of 2006. By year-end 2007, Saugatuck forecasts that SaaS adoption will grow to forty-seven percent, and by 2010, to over 65 percent. Meanwhile, SaaS usage within mid-size and large enterprises will more than double by 2010 – averaging more than 7 SaaS solutions in production.
• While a few technology “master brands” with established distribution channels will thrive in SaaS markets (e.g., Salesforce.com, IBM, Microsoft), the real long-term winners will be dominant business brands (e.g., telcos, banks, or master brands such as FedEx) that partner with leading SaaS Integration Platform (SIP) providers
• Reducing and managing software costs remain important attractions for SaaS, but users are focusing much more on Service Levels, Integration with Data and Workflow, and intra- and inter-company collaboration
• Hybrid application architectures are emerging – SaaS is increasingly linked to on-premise data, applications and processes through Web Services-based Integration APIs
• SOA, Open Source, Collaboration, Mobility, Mash-ups and Web 2.0 are converging on SaaS platforms, providing rich, configurable applications and business value
• The next two years will see exploding growth for ad-supported SaaS initiatives targeting consumers (i.e., business services and productivity tools) and vertical-market small business niches (e.g., health care patient records)
• SaaS is already expanding its reach into a variety of business services as traditional BPO providers struggle to rationalize their one-to-one outsourcing models, reduce costs and bring greater process efficiency to their clients