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A new survey has found that enterprise is taking a serious look at what software-as-a-service can offer

Software-as-a-service (SaaS) and service-oriented architecture (SOA) are two of the most important trends in software, according to a survey of 850 enterprise customers by McKinsey & Co and the Sandhill Group.

The study found 74% of respondents were “favourably disposed” towards adopting a SaaS platform, with companies currently spending 19% of their software budgets on subscription and on-demand purchasing models.

SaaS is particularly popular with small to medium-sized businesses. While the survey noted a minor fall-off in interest in SaaS at the very high end of the scale (enterprises of more than 25,000 people), interest among larger organisations is growing.

“For vendors, this is a strong indication that there is a clear opportunity even at the largest prospects for those that can offer the right product in combination with the right selling strategy,” the report said, adding that “nearly every company – or division of a larger enterprise – is a customer or a prospect for SaaS platforms”.

The study predicted that while SaaS and SOA were currently on parallel development paths, “we expect them to converge in the future”, paving the way for a “tremendous battle between the largest software vendors and the newer SaaS providers”.

With large companies such as IBM catering for enterprise while SaaS incumbents NetSuite and Salesforce prove popular with small business, the study predicted that “the real battle is in the mid-market space.

“For SaaS platform start-ups, that means trying to get into a room where there are already elephants vying for the customer’s attention. Success will mean locating a unique niche - and being prepared to have it invaded.”

In other trends, the importance of open source and offshoring has fallen slightly over the past two years, while there has been a considerable drop in regard to the consolidation of the software industry. The study observed that this might mean “consolidation has reached its peak”.

Further reading:

Living without an IT director Fundamental change in the way IT is delivered is encouraging companies to dispense with IT management

On-demand economics Now the case for software-as-a-service is proven, best practices are needed to ensure the potential becomes reality

The third way Combining on-demand software with on-premise code might prove to be the most powerful software paradigm yet. But the blend will not be without its difficulties

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