Article Presented by:
Anne SychWith budgets restraints and growing demands on IT personnel, many companies are choosing the course of Software as a Service (SaaS) as an alternative to expensive software purchases.
"Software as a Service (SaaS) is a model of software delivery where the software company provides maintenance, daily technical operation, and support for the software provided to their client" (wikipedia).
In the late 1990's the "ASP" (application service provider) model showed promise of becoming the way of the future for software deployment. With the fall of many dot-com businesses, ASP lived a short life only to be resurrected as SaaS.
The purpose of this article is to report what some of the industry experts are saying about the Software as a Service model.
IDC forecasts that worldwide spending on SaaS will reach 10.7 billion by 2009, a compound annual growth rate (CAGR) of 21%. (IDC, Worldwide and U.S. Software as a Service Forecast and Analysis: Adoption of the Alternative Delivery Model Continues #33120, by Amy Konary and Eric Traudt, March 2005).
SAAS has already reached high levels of penetration in customer relationship management (CRM) software, accounting for 30 percent of the CRM share in the middle market and about 14 percent in the SMB space. (Sanjeev Aggarwal, The Yankee Group)
"Gartner, Inc. predicts that by 2008 more than 50 percent of software purchases will be obtained via SaaS.
SaaS "empowers business units enabling them to buy, deploy, and run software without IT involvement," says Liz Herbert, an analyst with Forrester Research.
"There is no doubt that software as a service has become a driving force within the software industry. Indications are that customer adoption will continue over the next five years and spending will remain on the rise. The software industry must adopt a new frame of reference for value creation. Software as a service delivery is at the forefront of this trend, and adoption will grow as more customers experience software as a service and the offerings mature, becoming more readily accepted and available in the market" (Eric Traudt, Research Analyst, IDC).
"It's lower risk and can deliver and faster return on investment," Herbert says. Thinkstrategies' Kaplan agrees: "Packaged applications are difficult to maintain. SaaS costs can be amortized over time as well."
From the vendor perspective, selling licenses via subscriptions increases the predictability of software revenue and makes it easier to demonstrate future health (Amy Konary, Program Director of Software Pricing, Licensing & Delivery, IDC).
Customers like the low up-front costs of the subscription model, as well as the enhanced ability to build an ongoing relationship with the software provider that they pay on an ongoing basis (Amy Konary, Program Director of Software Pricing, Licensing & Delivery, IDC).
Time will tell just how successful this deployment model will be and many newcomers are to be expected as this market grows. In the meantime, keep your ears and eyes open for more about SaaS.
About the Author:
Written by: Anne Sych, Marketing Manager for Novo Solutions, Inc.
Novo Solutions, Inc. is an Independent Software Vendor (ISV) in Virginia Beach, Virginia specializing in Customer Support Software. Free trial versions of the Novo Help Desk Software, Knowledge Base Software and suite of web-based Customer Support Solutions are available. http://www.novosolutions.com/
