The SaaS market seems to the bucking the current negative economic trend. According to a recent Gartner report, the overall SaaS market will grow by 21.9% in 2009 - from $6.6B (2008) to $9.6B (2009). This growth is particularly notable because a different Gartner report predicted a decrease in overall IT spending of 3.7%.
Despite the angst over whether cloud computing is ready for prime time, it appears that the value of running business applications "in the cloud" isn't in question anymore. The report notes that the adoption of SaaS by enterprises is primarily fueled by the benefit of lower capital costs and faster deployment. I know there are some who question longer term ROI benefits of SaaS but in economic climate where "cash is king", the focus is seemingly shifting away from longer term ROI analysis to lower upfront costs. Also, the concerns over service reliability and security have somewhat diminished as IT organizations are getting comfortable with SaaS.
The bottom line is that SaaS is mainstream now - as an example - 18% of overall CRM revenue was attributed to SaaS. So in light of these facts, here are a couple of questions/thoughts -
- Why would any enterprise still deploy an on-premise solution versus a SaaS solution?
- Why all this love for SaaS but still so much hesitation over cloud computing in general? Is it just a matter of time or are there bigger issues at stake?
SaaS has huge benefits not only to the customers but also to the service provider as well. I've worked for several software product companies over the years and they all struggle with the same issues like backward-compatibility, back-patching, sunset policies, upgrades, platform compatibility, etc.
However, I recently joined a company called LoopFuse where we provide our software exclusively as a service. The fact that all of our customers are running the exact same version of our codebase at all times is a huge advantage for our consulting, support, and engineering teams. When we make a mistake we can deploy a fix and have it immediately resolved for every single customer (the vast majority of whom never knew it existed).
A lot has been said about the SaaS model in terms of how it benefits customers, but the benefits for the provider may be ever greater!
-Quin'
Matthew Quinlan
VP, Field Operations
LoopFuse, Inc.
Quin' - thanks for your thoughts. Like you, I too have spent much time in traditional enterprise software in numerous markets - financial/accounting, systems management, middleware, security. The issues you've mentioned are sadly too true - the overhead and time lag in rolling out on-premise enterprise software - from initial deployment,maintenance and ultimately to sunsetting is huge.
Like you, I joined a SaaS marketing automation company, Eloqua and I'm seeing the same benefits - all customers run on same version, latest patches - we provide on demand scalability and a level of security usually at level that most customers would not be able to deploy with an on-premise solution. Most of all, time to effective deployment is measured in hours and days not months and years.
BTW, I know our companies compete but I always appreciate your point of view and your visits. Thanks
Hi all! Thanks for sharing this info, Andre. SaaS defies the downward trend in IT spending, because SaaS IS down-spending for ITs. With SaaS subscriptions, they are cutting costs they would be paying with on-premise or traditional software. The problem now is finding the right SaaS vendor that perfectly fits your needs and wants. Each SaaS provider offers various features and services, with advantages and disadvantages.
HyperOffice.com recently released some free resources, including a white paper, SlideShare presentation, and YouTube video, on selecting a SaaS vendor and what to look for. The bigger deal is, there's a free live webinar hosted by Rusty Weston, former head of Global Services and InformationWeek.
All this information can be found at
http://hyperoffice.com/saas-reviews-for-smbs
Sohail Abrahim
HyperOffice.com