SaaS is dead; long live services?

Slow going: Gartner says Software as a Service still doesn't even equal one percent of enterprise IT spending.

InfoWorld's Neil McCallister took a page from Anne Thomas Manes  ("SOA is Dead; Long Live Services") and declared Software as a Service to be dead in his latest post. But unlike SOA, in which Anne actually remains a great believer in the fundamentals of service orientation, McCallister says the fundamentals of SaaS are struggling. He cites Gartner's thinking in this regard: Gartner says SaaS still doesn't even equal one percent of enterprise IT spending.

"At a presentation at the recent Gartner SOA & Application Development and Integration Summit in London, Gartner analysts said SaaS 'will have a role in the future of IT, but not the dominant future that was first thought.' Indeed, for all the hype around SaaS it has hardly taken the software industry by storm. By Gartner's estimates, SaaS as a percentage of total enterprise spending grew by only 0.6 percent from 2008 to 2009. That should give software developers pause, particularly those who are only now planning to roll out a new SaaS offering."

Is this a fair prognosis?  And are we also talking about "cloud" in general here -- which encompasses infrastructure as a service and platform as a service?

The market actually seems healthy enough -- consider, for example, some of Ray Wang's numbers for the on-premise and cloud enterprise software vendors, which suggest things are robust for cloud-based solutions. Wang said in the recent quarter, "SaaS vendor maintained their double-digit gains while on-premise vendors mostly showed positive traction."

Let's face it, it takes enterprises a long time -- cycling over periods of years -- to change their IT infrastructure. No one at this level is going to move to SaaS overnight, or even within a year. Ultimately, the direction cloud seems to be taking for many enterprises is in the direction of a hybrid model, involving private clouds delivered by the IT department, as well as third-party software delivery for peripheral functions.

If Gartner and McCallister do happen to be right, look at it another way. If cloud/SaaS is descending off the peak of Gartner's vaunted "hype cycle" into the "trough of disillusionment," at least enterprises haven't shelled out great gobs of money this time as they get disillusioned.

Again, is it a fair prognosis?

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