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Tuesday, September 15, 2009

SaaS Evolution & Endless Cycle Of Innovation

Ever wonder what the current state of SaaS adoption is and what does the future hold? Most of the answers come out in a report from Saugatuck. In its report very aptly titled, "Journey of endless cycle of innovation", it notes that SaaS is now an agent of change inside enterprises and could reach a state of taking on little less than 25% of new IT workload inside enterprises by 2012. It additionally points out that the nature of SaaS is changing user business, and user business is changing the nature of SaaS. True indeed. As we see today, enterprises are tired of over-provisioning by 150% only for equipment to sit idle and burn power/paying for bells and whistles in software and eating money in the process.

Saugatuck sees SaaS developing and being adopted in Waves, from stand-alone applications through integrative business systems, to game-changing transformative business workflow capabilities, through to ever-more-sophisticated Cloud Computing capabilities. Development, deployment, and adoption vary by size of firm, by regional and vertical markets, and by firms’ IT strategies. The SaaS markets are expected to go through at least three waves. Wave 1 took place from approximately 2000 to 2006. Stand alones characterized Wave 1 adoption – the focus was on reducing TCO and rapid deployment using standard web technologies here .

We are currently enjoying the breeze of the next series of Wave – Wave 2 expected to rule the roost till 2011 where we see mainstream adoption of on-demand applications and mostly coalescing as business services. Today we are seeing the evolution of SaaS integration platforms Viz SIPs. These provide for various set of SaaS point applications to interoperate. This enables in some cases to make the dream of fostering the much desired vertical and horizontal solutions & ecosystems.

How does a SaaS ecosystem look like ? Streams of related SaaS applications co-exist to deliver to the needs of a horizontal or vertical industry market and most importantly delivered as a business platform on-demand. Covering business, data , collaboration services and the like.

For business transactions are most dear to their heart as a first principle and here the adoption rates and evolution curve both travel fast. Not only that, even the quality of solutions are also improving-from plain focus on configuration, integration challenges, the veneer is also improving –usability and workflow mechanisms, service based extensions etc. Net result : Some sort of integrated industry solutions catering to small, medium and large enterprises are beginning to get deployed. The appeal is widening to cover a large spectrum of business. This would lead to fulfilling rising business needs thus more and more integration would happen at the data, process levels covering both on-premise and on-demand applications across the business spectrum.

SaaS Wave 3 is envisioned to start in 2010 and completely form by 2014 primarily characterized by ubiquitous adoption of business service delivery available on-demand. Adoption of SaaS centric enterprise applications enabling business transformations that include cloud collaboration platforms characterize this wave of SaaS evolution. The outreach would cover SME to large enterprise business encompassing industry solutions to core enterprise solutions provided as services. This phase would also provide for integration with other on-premise applications at the data, process and application levels. 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.

As part of this evolution, one could actually see more opportunity in defining, creating new platforms and service like vertical/niches going beyond the currently available horizontal solutions, factoring the high degree of complexity therein.

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