Other factors driving SaaS growth include:
Flexibility: Seasonal businesses or those with highly variable demand for technology servicessuch as software companies whose demand peaks during product testing cyclesno longer have to over-provision for peak periods. SaaS provides a short-term option for meeting high-demand requirements. As a matter of fact, HP recently announced a software testing service, HP Quality Center as a Service, which specifically addresses this problem and includes 24 X 7 operational support.
Payment Structure: For many companies, SaaS vs. on-site decisions are similar to lease vs. buy decisions. Paying monthly tends to be easier than paying in one large payment, and also helps companies that are limiting capital expenditures in favor of pay as you go services. SaaS vendors not typically requiring long-term contracts is an additional incentive.
Security and Governance: Although one of the primary objections to SaaS is from the security standpoint, Treb Ryan, CEO of OpSource, said SaaS vendors have made major investments in security and compliance, with particular attention paid to industry standards such as Payment Card Industry (PCI) standards, Health Insurance Portability and Accountability Act (HIPAA), and Statement on Auditing Standards for Service Organizations (SAS 70).
Regarding the future of SaaS, there is one idea from the SaaS Summit that particularly struck me. In Don Tapscotts presentation, he talked about a generation that equals the baby boom generation in size and has grown up with mouse in hand. Their view of an application is similar to our view of electricityits just there. This generation didnt have to write a program to access FaceBook they went to the FaceBook site and the application was waiting. Same with texting on cell phones and using Ask.com as a source for research papers. They didnt have to do the technical work to provision or support these services and dont even pay to use many of them. In another 15 years, these kids will become decision-makers in companies worldwide. And you have to ask yourself the question: "Will this new generation of CIOs see business value in the time, money, and effort we are currently expending to deliver IT services?"
Call me crazy, but I dont believe they will.
Julie Craig is a senior analyst with Boulder, Colo.-based Enterprise Management Associates, an industry research firm focused on IT management. Julie can reached at email@example.com. Additional research into autonomic computing is available at EMAs site at www.emausa.com. In addition, EMA is in the process of creating a new, End-to-End Application Management Online Guide, which will be available by the end of Q1, 2009. Continue to check EMAs site for this Guide, which will feature detailed profiles of multiple application management products and be free of charge.