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There is an interesting article over on Cloud Times that begs the question of, “why isn’t there more usage of SaaS as a percentage of overall software use/revenue?”.

The cognitive dissonance in the market between “SaaS is going to be everywhere” and “SaaS will hit $16B in 2015″ has baffled me.

In addition to the reasons stated by Jason Currill (CEO of Ospero) in the article, of why SaaS won’t deliver 100% market share any time soon, there are:

• Multi-tenancy of data is a problem with many industries;
• Performance of compiled vs interpretive languages for applications such as simulation;
• Interoperability between software applications and data bases within complex work flows such as broadcast media, semiconductor design, etc..

There are many that believe that the incumbent software vendors will “merely” be displaced/disrupted by SaaS startups and so the question of re-writing existing applications as SaaS will “go away”. Even without all of the other challenges, re-inventing a wheel of this complexity, that has taken decades to get working within a large ecosystem, is a Herculean task….and very expensive!

SaaS has its place and will continue to be very successful.  However, I look forward to the time when the industry collectively recognizes that we will actually live in a heterogeneous world.  Put the SaaS hammer down, and stop looking at everything like it’s a nail.

Posted under cloud

There’s an excellent discussion going on over on the Cloud Computing Google Group about the pace of migration of traditional software to a SaaS model.

Here I recently went into some of the very real reasons why the migration is slower than some would like, but didn’t really talk about the pace of adoption.  There are some numbers that make for some interesting analysis.

According to PwC, in 2009, the top 100 software vendors (traditional non-SaaS) generated 3.7% of their revenues from SaaS in the US; and 1.1% of their revenues from SaaS in Europe.  In the same report, the US has a 44% market share and Europe has 36% market share by revenue (License, Maintenance and Support).

According to Gartner, in 2010, the WW installed enterprise software market grossed about $104 Billion.  So, roughly, we could say that installed software vendors (US & EU only ) brought in nearly $5 Billion in revenues in 2010.  So nearly 5% of revenues since the inception of SaaS (not including ASP)?

While some ISV CEOs may position the cloud as a fad/irrelevant/non-strategic/etc. the smart companies are out there experimenting with technologies, use-models, and business models…..but most importantly, they’re talking to their customers (who will buy) and vendors (who are looking round corners for their customers).  The benefits of the cloud are undeniable, but there are impacts on both customers and vendors that need to be carefully navigated.

Even after a dozen or so years since the launch of Salesforce.com, we’re still in the early adoption phase of this new phase of computing delivery and application consumption.

Will installed software ever go away?  Have you installed an iPhone/iPad/Android app recently?

Posted under cloud

Software-as-a-Service (SaaS) has arguably been around since the launch of SalesForce.com in 1999. We could even say that it’s inception pre-dates even this milestone, but under a different name - Application Service Provider (ASP). Remember those?
The revenue growth rate of the SaaS market is a healthy 22%, and has grown to around $12 billion annually. At the same time, installed software is around $150 billion annually and still growing at about 12% per year. Why is that? Why isn’t the traditional software market dying a quick and rapid death?
While commentators say that it’s just traditional ISV’s (Independent Software Vendors) dragging their feet, there’s more to it than that.

Over on Software Advice, I explore both the selling and the buying side of the installed software business to try and understand why the installed software isn’t being replaced by cloud computing, but will continue to find a way to leverage it.

Posted under cloud