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Software-as-a-Service (SaaS) applications, software applications that are accessed
and updated via the Web, are becoming commonly known as the more flexible, user
friendly, cost effective, and easier-to-manage alternative to traditional in-house
software. SaaS applications shift the responsibility and the cost of developing,
updating, maintaining, securing and hosting an application to the provider.
This business model lets SaaS users focus on growing their businesses and products,
rather than dealing with the backend software and associated overhead.
The SaaS business model, where a vendor will develop and host an application
which users can then sign onto for a fee and using only a web-browser, is popular
but not exactly new. Hosted solutions, and the companies that provide them,
have been around for many years under different names: Application Service Providers
(ASPs), On-Demand software, Cloud Computing applications, etc. However, in 2009
as the economy entered into a recession and companies searched for ways to cut
costs and reduce overhead, the SaaS market grew exponentially. The appeal of
"renting" software and services in a shaky market, rather than purchasing them
outright, is readily apparent. Additionally, with most SaaS providers, users
don't sign any long term contracts and can discontinue using the service at
any time without penalty. Not only did new vendors enter the SaaS market, but
older established software companies began offering their services and applications
via the web as well. As the market grew, so did media exposure of this "new"
As with any other industry, as the SaaS marketplace continues to get more crowded,
vendors will need to find new ways of differentiating themselves in order to
appeal to new customers. This shift will likely coincide with the increased
ubiquity of mobile devices in the workplace. According to a November 2009 report
from Forrester Research, 13% of information workers use smartphones for work
at least weekly*. As this number continues to grow, so will the range of services
targeted toward this market.
Just as earlier networks consisted of several portals which connected via a
mainframe, mobile devices and smartphones will increase in ability, eventually
operating more as portals to a cloud based server. Workers will begin using
their mobile devices more and more for in-depth business process. While it's
quite obvious now to even the most casual observer that the days of mobile phones
being used primarily for communication are almost over, this is a trend that
will likely continue with greater speed in the New Year. As this shift towards
a mobile workforce rapidly increases a whole new category of mobile software
for business operations will likely result. With new services like Project Management,
CRM, Document Management, Issue and Ticket Management geared toward mobile users,
entire businesses could effectively be run from a mobile device.
While some vendors already offer mobile applications that work with their hosted
software; the opportunity will exist for a greater push into this market. Rather
than just applications offering a glimpse of the actual product, users will
be able to purchase software applications for email and issue management, client
fulfillment, project management and more. These could be applications that are
designed for mobile devices and integrated into a desktop solution. This would
be a 180 degree turn from the current standard.
The US workforce is becoming more mobile and workers are encouraged to keep
frequent contact; these factors point toward future growth in not just the mobile
device industry but also in the SaaS industry as well. Indeed, overall SaaS
growth seems imminent. Many companies scaled back during the 2009 business year
by closing offices and hiring remote workers. As a result, 2010 will start off
with a large number of workers located outside of a main office, working in
satellite locations. SaaS solutions work especially well in situations like
this, since SaaS solutions eliminate the need to provide employees with hardware
and software meeting certain specifications. All companies now need to provide
remote workers, aside from a working computer and an internet connection, are
an account name and password.
As the SaaS marketplace grows in 2010 and beyond and vendors need to differentiate
themselves from the competition, there will be increased growth in vertical
markets. Practically any software solution that currently exists can be hosted
on a vendor's servers, and offered as a SaaS application. However, as companies
explore these new opportunities in vertical markets, they'll benefit greatly
from working with other SaaS providers. Why reinvent the wheel when you can
enter into an API partnership with a provider in a different market?
Integration among SaaS providers will not only be a result of industry growth,
but it will also help to fuel additional growth. Vendors themselves can cut
development costs by teaming up, while offering their customers a wider range
of products and services in marketplace where they have already established
a loyal customer base. Partnerships among SaaS vendors and also between established
SaaS players and more traditional software vendors will likely increase as established
vendors ramp up partner programs to take advantage of the industry growth.
While it's impossible to predict the future, one can tell a great deal about
what will happen in the Software-as-a-Service market by just taking a look at
past trends. 2009 was definitely a difficult business year for just about all
industries, however as companies contracted, the market for Software-as-a-Service
applications grew. Despite growth in a down year, a noticeable shift in the
way that companies now approach IT and software needs, lends itself toward continued
demand for SaaS services even in better economic times.
About the Author
Yaron Sinai is the founder and CEO of Elementool Inc, which was established in 2000. Mr. Sinai has a bachelor degree in Accounting and Economics from the Hebrew University of Jerusalem. Prior to founding Elementool, Sinai worked for the Federal Bank of Israel, BDO accounting Firm, and several software startup companies. Sinai was also the founder and CEO of Chart.co.il in 2005, an online advertising company that provided text CPC automatic advertising service on leading media and news websites in Israel. The company was sold to the Israeli branch of Leo Burnett advertising firm in 2007.
Mr. Sinai is also the founder and CEO of Raisix Inc. which develops lifestyle iPhone applications.More by Yaron Sinai
Elementool is the leading provider of web based project management tools including: help desk, issue tracking, test case tracking, time tracking, file sharing, forums and docs. Customers such as Fortune 500 companies, International banks, automotive manufacturers, IT consulting companies and software start-ups, use our project management tools daily, in their project development and testing process.