The software-as-a-service (SaaS) continues to increase momentum with many companies and vendors jumping on the bandwagon. It’s estimated that the global SaaS market will reach $132B by 2020 of which $76B being driven by the small and medium business (SMB) markets and $56B from the enterprise SaaS markets. Learn why this matters.
Global Software Market Getting 'Saas-y'
According to International Data Corporation (IDC), analysts forecast SMB to be the largest of the IT segments with a reach of 38 percent of the market by 2020. Along with Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS), SaaS is predicted to grow 20.1 percent or $46.3 B in 2017 according to Gartner.
The SaaS market has matured over the past few years and has been aided by the ubiquitous broadband Internet and mobile communities and has gone main stream across many verticals. More recently, the startups, business-to-business (B2B), mom and pop shops and small businesses have all made the leap for profitability and survival against the industry power houses. Gone are the days of on-premise hosting that required servers, staff and maintainers, space, environmental controls and the like – some legacy apps still remain here but are quickly being phased out – they are migrating towards the cloud. The trend which continues for 2017 is towards private, public and a hyper-converged infrastructure (HCI).
SaaS vendors have been following the trends for years with SaaS adoption in the enterprise offering purpose-built high quality products to replace legacy apps. This is consistent with a Synergy Research Group report that estimates worldwide revenues from SaaS and cloud services to exceed $200B by 2020 with an average annual rate of 23-29 percent. The major drivers include sales/CRM, data visualization, ERP, HR, ad agencies/marketing, healthcare and education, logistics/fleet/GPS, accounting, retail, finance, and others.
Both Gartner and Forrester provided 2016 predictions in which the public cloud market would reach $204 billion with 16.5 percent growth over the previous year. Extending this to 2020, the estimated global public cloud services market could expect to see a 22 percent annual compounded growth.
- Developers are pushing SaaS adoption with a focus on SDKs and APIs as mission-critical cloud options.
- Private cloud is on the rise may be attributed to the increase threat, concerns, and successes of cyber attacks. This includes 30.9 percent planning to migrate and 54.3 percent who are already in the private cloud.
- SMBs fuel SaaS demand fueled by CRM, HR, BI/analytics, and storage solutions it’s estimated that 78 percent will be in use within three years and 64 percent are already using SaaS.
- SaaS market is maturing, Customer adoption continues to soar with satisfaction due to low entry costs, OpEx budgets instead of CapEx, increased software revenue, and deeper customer intimacy.
- Legacy software vendors making the move with 25 percent legacy and 75 percent others for public cloud market acquisition 2016.
- SaaS verticals are taking off with industry-driven features for demand-focused businesses of healthcare 96 percent, real estate/construction 65 percent, energy and utilities 53 percent, education 35 percent, legal 30 percent, retail 30 percent, financial 26 percent, etc.
The mature cloud and service offerings of the heavy hitters helps to extended features and optimization (i.e., Adobe, AWS, Dropbox, JiRA Atlassian, Microsoft Office 365, Salesforce, Slack, etc.). Business models continue to change and find profitable means to stay competitive. For many organizations, the move towards the cloud includes advantages that can’t compare to on-premise systems – for data centers supporting the demands and expansion of cloud-based customers which offers challenges and opportunities. For IT managers, this means:
· Optimizing IT service delivery – improvements in hardware, networking, broadband connectivity, and reliability/availability of servers and services.
· Better security – for many organizations this may include HIPAA/PHI/PII as well as audits to ensure data integrity and privacy. Employment of Cloud Access Security Brokers (CASB) as a SaaS-based platform could provide defense in depth along with existing security measures to provide holistic protection.
· Customer costs – leveraging SLAs, both customer and data center facilities can set expectations towards delivery of services and, as a result of using SaaS, the customer benefits. Additionally, this may include maintenance, planning, cost of space, training, technical assistance, and monitoring.
· Try before you buy – this may be appealing towards new customers who are on the fence and uncertain about the benefits of SaaS. An example is trial-based software apps similarly to a magazine or membership subscription.
· Fast deployment and maintenance – for new customers, getting their operations online quickly is profitable and crucial to business survivability. The maintenance with keeping servers online and services updated becomes much more manageable for both the data center and business users.