Saugatuck has released a new report “An Endless Cycle of Innovation: Saugatuck SaaS Scenarios Through 2014”. This is the result of the fourth annual research program into SaaS by Saugatuck, which says that Software-as-a-service (SaaS) is a disruptive trend that is changing the fundamentals of business for both the user companies and for SaaS providers themselves.
According to Saugatuck, the disruption apparently happens as part of a “multi-year “loop” cycle that reciprocates between users and providers, with each side influencing the other in unforeseen ways”. Saugatuck says that many companies end up mismanaging SaaS implementations and this prevents those companies from being able to derive real competitive advantage from SaaS. Likewise, many SaaS providers are not taking advantage of the global market for their solutions because they are tied into these ‘multi-year loops’.
The report released by Saugatuck attempts to understand how users, providers and ISVs interact during these multi-year loops through exploring a number of different scenarios.
Here are some interesting highlights from the research that were provided via the press release
- Despite impressive investments in SaaS development and adoption in different parts of the world, SaaS (and Cloud Computing) will not become the primary IT standard and practice by YE 2012. SaaS will instead be primarily an important “agent of change” through this time period. By YE 2014, however, SaaS (and Cloud Computing) will become integral to infrastructure, business systems, operations and development within all aspects of user firms, with variations in status and roles based on region and business culture.
- Many traditional ISVs will be paralyzed by “strategic uncertainty” regarding SaaS and other software business models through YE 2012, opening more doors for more SaaS providers. At the same time, the global economic situation will severely thin the ranks of existing, early-stage SaaS start-ups (especially those that are not cash-flow positive).
- While few users will “swap out” existing core legacy applications and systems with SaaS solutions through YE 2012 – except in highly commoditized market and customer segments – SaaS solutions will become the de facto choice for the majority of user organizations that are replacing legacy applications or business systems as they reach the end of their useful lives, or when driven by other important business considerations (e.g., M&A activity).
There’s no question that SaaS is undergoing a fundamental shift in how software is acquired, used and paid for. It is a very disruptive trend that will certainly continue, especially as the shift towards cloud computing.
This report is based off a web survey including 1,788 qualified user enterprise executives; interviews with 30 user enterprise executives with SaaS experience; and briefings with 25 SaaS vendors/providers.
The report is now available for purchase and downloading via Saugatuck’s web site.