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SaaS inappropriate for major software applications: Forrester

By SiliconIndia   |   Thursday, December 29, 2011
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SaaS (Software-as-a-Service) will have problems getting traction from the lower-level software enterprise. It faces obstacles in major spheres of software like operating system, database, software for internal IT management, data management and securities transaction processing system.

Software-as-a-service (SaaS) is a set of capabilities and engagement models in the IT industry,particularly in the emerging world of cloud computing. Question has been raised earlier, "Is SaaS a truly disruptive technology?" Moreover, some new and emerging software products like blog and wiki platforms began as SaaS products with no disruption of existing vendors. Speculations were made that SaaS will only be a disruptive force in software products that make up about 25 percent of the total global software market, especially in customer relationship management, human resource management, IT management, and security software, Forrester said.

SaaS is raiding in mature application areas such as SCM (supply change management), particularly when the customer hasn't already purchased such functionality from an on-premises vendor. Products where SaaS has taken hold of at least 50 percent of revenue amount to only 3 percent of the total software market. In other categories, SaaS is now "the majority model for software sales and delivery," the report states. Those include e-purchasing, expense reporting tools, and blogging and wiki platforms. The emergence of new product variants has also given SaaS vendors who sell them a chance to mature while legacy players catch up.

SaaS is typically billed on a subscription basis and is generally considered easier for a customer to migrate away from than an on-premises product, a situation compounded by the fact that many SaaS contracts are year-to-year.

On the contrary, the likes of SAP and Oracle are now moving quickly to bring more SaaS products to market, particularly for their largest customers. SAP is planning to deliver a series of add-on SaaS extensions for its Business Suite software, while Oracle has said its upcoming Fusion Applications will be available in SaaS form according to the taste of customers.

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