The future is all about SaaS

13 Aug 2012

 A business manager reading some of the more technical descriptions of infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) would quickly conclude that the information on offer is not that relevant to them. He or she may note that this was all to do with “the cloud” and, especially amongst the more conservative that harbour doubts about such things, believe that a wide berth should be given, at least for now. They would be right that that IaaS and PaaS are not directly relevant them, but wrong to think they can avoid the cloud.

As was pointed out in a previous post, any cloud platform is ultimately measured on its ability to help deliver better applications to businesses (and/or consumers). Many of the independent software vendors (ISVs) that write and sell the off-the-shelf applications that businesses rely on are turning to cloud platforms. This makes sense for their businesses for all the same reasons as it does for any other business; reliability, scalability, cost/performance etc.

Most ISVs, especially smaller ones, have no more interest in running enterprise class data centres than any other business. Their core skills are providing business applications, often focussing in on particular sectors; accounting for small retailers, case management for lawyers, supply chain services for car dealers etc. The aim of ISVs is to deliver better applications with better service levels for their customers and many have come to realise that using a third party platform to base their application on is the best way to do this.

Many start-up ISVs are going straight to cloud and only offering their applications as on-demand services (software-as-a-service/SaaS). Established ISVs that have delivered their applications mainly on-premise in the past, are bringing out SaaS versions of the products, often based on third party IaaS or PaaS platforms. Only the very largest of SaaS providers run their own platforms.

The majority of the growth in the use of cloud services over the coming years will come from organisations buying SaaS not direct subscriptions to IaaS or PaaS. Analyst estimates vary quite widely (e.g. from Ovum and Forrester), but the overall cloud market will be somewhere between $60bn and $120bn by 2016 with 60% to 80% of the orders being for SaaS. Of course, if depends how you count, because much of that SaaS business will be driven by ISVs who are themselves buying resources from third party IaaS and PaaS providers.

As for the conservative business managers who think cloud should be given a wide berth, they and their organisations are almost certainly using it anyway. They may not realise that their technical guys switched to a cloud-based email service from an in-house server six months ago; in fact the only thing they notice about email is that it has recently become more reliable. They do use a web browser these days to place orders with many of their suppliers, but that is the supplier using cloud isn’t it, not us? They may well have overlooked their marketing department using Facebook for some highly targeted campaigns and the telesales teams tracking down leads via LinkedIn and Twitter.

As more and more business turn to cloud based applications, IaaS and PaaS providers will thrive with them. Those procuring SaaS applications will need to do their due diligence as always and they will need to include some new criteria such as ensuring data storage is secure and compliant; topics Quocirca will be focusing on in the coming weeks.

Originally posted at Lunacloud Compute & Storage Blog

Bob Tarzey, Analyst and Director, Quocirca

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Reader comments

Big data

It always amazes me how frequently people forget or overlook where they are already making use of the cloud in a SaaS context. As you reference, the analyst community is quite adamant that SaaS growth will be significant and a vital part of the cloud story. The growing focus on big data in organisations of all shapes and sizes will be an interesting driver to this trend, and I think it guarantees the association of cloud computing with positive business outcomes

Posted by: Alan Priestley, Intel Cloud Builders  20 Aug 2012