Software-as-a-Service (SaaS) was probably the Big Data of the early-2000s – at term bounded about to describe a concept which actually had its roots going back decades.
In short, SaaS is a cover-all terms for cloud-based, on-demand services for computers and is most commonly associated with the likes of Amazon Web Services, Salesforce.com and a myriad of Google apps.
Many travel tech suppliers have got in on the act, too, including the GDSs and companies such as travel and expense firm, Concur.
But has SaaS taken off as widely as IT observers predicted?
Staff.com has pulled together an interesting infographic to outline some key data points as SaaS evolve against its packaged software counterpart.
Perhaps some will be surprised to see that SaaS still only accounts for just over 4% of sales compared to packaged software…
Related posts:
About Kevin May
This is not surprising for a couple of very important reasons. Packaged software sales are still the bulk of high end enterprise software products for large corporations. SaaS, in general, is designed for smaller enterprises which means that there are probably more companies (in total) using SaaS but the cost per sale of those customers is significantly lower. The pricing model for packaged software and the support that goes with it is also very different than (in general) SaaS which are much lower initial and ongoing costs. Frankly I don’t think this infographic is either useful or relevant. I think a more relevant infographic would be the number of businesses (across the various size ranges) that have adopted SaaS solutions.
Why should anyone care either way except for the SaaS vendors themselves and their flocking analysts?
I agree with Stephen. ALL our customers are now using our system delivered as a fully hosted service. Whether you call that a “cloud service” or “SaaS” is up to you but it definitely isn’t a package that is purchased and installed on the client’s hardware. It is a fully managed, maintained and regularly updated offering.
As Stephen says, the number of businesses (across various size ranges) would be a useful indicator.
The infographic does not specify what is included in packaged software. If this includes operating systems (like Windows), desktop apps like MS-Office and so on, then of course that will account for a huge percentage of all sales. But mission critical, vertical and niche applications are certainly best delivered as a service by the companies that create them, and know how to keep them up and running 24*365. As Mark says above, that’s how we prefer to deliver Sell-It Suite to clients. It’s also how we prefer to consume services from our suppliers, like SalesForce, ConstantContact and more recently Blueprint. If you just need the business benefit from the application, why take on the headaches, costs and risks of running the system on your own hardware platform, when the suppliers can do that so much more efficiently.
Among all the benefits of cloud computing, perhaps the biggest benefit of SAAS solutions is how they’re a reflection of a very different development and adoption cycle in the software industry. The capital required to build enterprise grade cloud software is a fraction of what was required 10 or 20 years ago. That means huge value is being transferred to businesses who can now empower their employees and their customers through innovative software; where previously this same software capability was enormously expensive and thus restricted to the largest of enterprises. Bottom line, just looking at total dollars spent on packaged vs. SAAS software (as opposed to user adoption or value created) is comparing apples to oranges as SAAS software is more pervasive and less costly by design.
It was this new world of software design and development that contributed to my partners and I leaving our high powered product jobs at Microsoft to found the SAAS company buuteeq. We embrace this kind of innovation as we build huge value for hotel and lodging operators worldwide.
The one thing that I will add to the other comments is that the fact that SAP and Oracle are #2 and #3 makes this infographic pretty useless. SaaS revenues as a small % of these companies’ sales.
And it was only a few years ago that Larry Ellison was making fun of the cloud. Oracle even bought Sun to sell hardware! That’s how committed they are to SaaS.
And if it wasn’t for acquisitions, neither SAP nor Oracle would have any SaaS products at all.
Would you agree a majority of Packaged Software companies at one point in their infant state, were SaaS providers? My take away here is that while SaaS companies are on the rise as the demand for tech services increases, it’s clear the most efficient and best way to mass scale a product is through packaging.
Sorry, but this analysis just doesn’t compare apples to apples. Amadeus, Sabre and Travelport are not packaged software providers. Amadeus is bigger than Salesforce.com. Looking at Staff.com’s website analysis in this field just isn’t their usual business, running an employment website is. Maybe they haven’t even heard of Amadeus, Sabre or Travelport.
Bottom line, we shouldn’t take this stuff too seriously….