SaaS predictions from around the Web

Here's a selection of 2007 SaaS predictions from Microsoft's Gainpaolo Carraro, a number of Enterprise Irregulars including Jeff Nolan, Dennis Howlett and Charles Zedlewski, and analyst firms IDC and Saugatuck.
Written by Phil Wainewright, Contributor

I'm not the only person who's been making 'SaaS in 2007' predictions. Several bloggers and an analyst firm have also leapt in.

The first set of predictions I came across was by Microsoft's Gianpaolo Carraro, who responded to my initial prediction with a post listing several of his own. This is a very astute set of predictions from someone who understands the space incredibly well. I specially liked his first prediction, that SaaS will get so well established people will stop trying to define it:

"It won't be software as a service anymore, it will be 'just' software. The same way that it is not object oriented programming anymore, it is 'just' programming. (0.5 probability in 2007, 0.8 in 2008)"

Certainly there seems to be a strong consensus out there that SaaS is going to go mainstream. OK, maybe the bloggers who take the trouble to make SaaS predictions are a biased self-selecting sample, but take a look at IDC's 2007 Predictions report and you'll see this mainstream analyst talks about "an IT market in Hyperdisruption" and cites SaaS as a major driver of several disruptive forces:

  • "Software (and business) as a service. The increasing importance of SMB markets is accelerating the shift to SaaS and, much more important, business as a service (BaaS).
  • "Service oriented architecture (SOA). The shift toward SaaS is poised to finally accelerate the adoption of SOA, the foundation for next-generation IT and the business and consumer services that depend on it.
  • "The development of innovation ecosystems and microverticalization. SOA adoption and SaaS/BaaS are accelerating the growth of innovation communities/ecosystems, which will lead to a proliferation of new microvertical software and services.
  • "Services as software. To gain the leverage needed to profitably serve the growing SMB opportunity (much of that in high-growth, emerging countries), services vendors are aggressively transforming more of their IP into software, taking advantage of SOA and online delivery models (SaaS/BaaS)."
Back to the blogosphere, there are various predictions from fellow Enterprise Irregulars. First out of the blocks was Dennis Howlett, with a couple of SaaS items mixed in with his full list of 2007 predictions:
  • "Again it didn't happen in 2006 though the signs were there. The SaaS players will really start to kick established players' butts
  • "The SaaS vendors will develop hybrid, desktop applications that will have the effect of lulling the on-premise vendors into believing they can relax on SaaS development."
Jeff Nolan made just one prediction but it's an interesting one:
"... we will witness a lot of high profile executive departures from mainline enterprise software companies to SaaS companies. It will be this flow of executives out of traditional software that will alarm SAP/Oracle/Microsoft/IBM/etc. and bring about a rethinking of their respective strategies in this area, along with an increased willingness to throw some of their existing businesses under the bus in the pursuit of SaaS strategies."

One of a set of predictions from Charles Zedlewski picks up another interesting theme:

"A significant handful of SaaS companies will make it through the IPO window. Probably NetSuite, Successfactors and at least one more."

I wouldn't disagree with that list, As for the "one more", Jason Wood suggested in the wake of its deal with American Express last November that Rearden Commerce "likely has its sights set on an IPO in the not-too-distant future." This would complete a trio of substantial ventures coming to market, in addition to any others that may be on the cards.

All this upside has a flipside of course. CIO Today's Ephraim Schwartz yesterday homed in on potential problems ahead for enterprise IT folks as SaaS adoption grows:

"Of all the issues IT will deal with in 2007, from maintaining regulatory compliance to building out SOAs, SaaS could quickly become the new focus of IT. In fact, forget about SaaS vendors' claims that the SaaS model eliminates the need for significant IT oversight; the opposite is actually closer to the truth. As SaaS enters the mainstream ... one critical challenge must be addressed. And that challenge is access and how to manage it."

Completing this round-up of 2007 predictions, analyst firm Saugatuck Technology, which made waves in 2006 when it seized the SaaS 2.0 moniker for its report on Software-as-a-Service as Next-Gen Business Platform, has issued a briefing on six key trends for SaaS 2.0 in 2007. It highlights important trends such as the emergence of SaaS integration platforms, marketplaces and collaboration platforms, the maturing of SaaS customization and convergence with other emerging trends. But the two trends that stood out for me as the most intriguing concern the roles of analytics and appliances:

  • "SaaS analytics, dashboards and performance management tools are driving a closed-loop feedback process that summarizes and presents business metrics to customers, guides customers thru purchase decisions, and delivers market feedback to partners in SaaS Ecosystems and Business Marketplaces.
  • "SOA's impact on SaaS has lead to development of the Extended-Enterprise Service Bus (X-ESB) as a managed-service appliance ... We expect to see an increasing number of SaaS Appliances emerge over the next few years as SaaS becomes fully integrated into the enterprise."

Who's right and who's wrong? Share your comments and predictions for 2007 in Talkback.

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