SaaS is dead; long live services?

SaaS is dead; long live services?

Summary: 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?

Topics: Emerging Tech, Cloud, Data Centers

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  • RE: SaaS is dead; long live services?

    I strongly believe that everything associated with saas or cloud is still more targeted at SMB. Large organizations are too paranoic about security and availability and are not ready to sacrifice it in favour of delusive hope for cost savings. At least this is something that works in the Enterprise 2.0 market. We recently launched a cloud edition of our intranet and see service providers actively selling it only to companies of not more than 100 users
  • RE: SaaS is dead; long live services?

    Saas = SOA = "Marketing Hype"
    • RE: SaaS is dead; long live services?

      Further on that point: the acronym SaaS may die (just like ASP - Application Service Provider did). But the concept is not going away and will likely only grow. Now it's called "cloud", in a year or two it will be called something else, but the move away from premise is not going to end. At least not for another 5 years when the pendulum will shift back toward decentralized infrastructure.
    • RE: SaaS is dead; long live services?


      Exactly. To take your analogy further:

      SaaS = Cloud = 'Functional Outsourcing.'

      The term 'Cloud' is just lipstick on the outsourcing pig.
      • RE: SaaS is dead; long live services?

        Interesting. If you believe that Cloud and SaaS are the same thing I think you are missing a trick. Whereas Cloud might encompass SaaS, 'we' tend to think of the cloud more in terms of infrastructure and platforms as a service. And clearly functional outsourcing is significantly different to infrastructure as a service.
      • RE: SaaS is dead; long live services?

        @civikminded - agreed.
  • Maybe EvolutionMV's approach ...

    ... would be a more suitable paradigm.
  • RE: SaaS is dead; long live services?

    Whether enterprises buy SaaS is as much a function of what kind of software is available in the cloud and how it is sold (enterprises require salesmen (live human beings) who know how to sell to enterprises).

    No one who knew anything about enterprise computing ever thought that enterprises would use SaaS for everything. After all, a substantial amount of their software is custom-built to their own needs. The everyone will use SaaS for everything was hype.

    But enterprises are interested in SaaS for applications where customization and/or enterprise control don't add anything and sop up lots of scarce resources.

    As another oster said, it takes enterprises a long time to change the direction of their big ships. It's still early.
    • RE: SaaS is dead; long live services?

      Well put. At the investment bank where I work, we have identified several application suites we'd love to see provided 'as a service'. However, we'll need to wait for entrants to fill this market spaces. Opportunities abound...
  • SaaS helps the vendors, but businesses don't like to lease.

    ROI and TCO are affected.

    Which is odd as Microsoft Enterprise Licensing agreements are effectively a lease as well...