On-demand/SaaS “set to take off in 2007”

Like several other analysts (see my Predictions post), Jeff Kaplan, of THINKStrategies, is also predicting a good year for on-demand services in 2007.

In a recent Network World column, he draws on a recent survey of 550 IT professionals and business executives which “found that about 40% use one or more managed services, and nearly 95% are either very or somewhat satisfied with the quality of these services.” Jeff goes on to talk about how today’s managed services and software-as-a-service (SaaS) solutions also provide greater back-up and recovery capabilities than many corporate set-ups, and permit greater collaboration among workers.

In another article, SaaS Appeal Growing, for the Cutter Consortium, Jeff talks about another survey whose results showed that “interest and adoption of on-demand software solutions is accelerating”.  Forces driving the SaaS movement included:

  • frustrations associated with traditional, on-premise software
  • success of on-demand services in the consumer market (eg: Amazon.com, Google, iTunes, YouTube)
  • proliferation of broadband and new software tools and techniques.

Motivations to adopt SaaS included:

  • ability to accelerate the deployment process
  • ability to eliminate additional infrastructure costs
  • allowing IT and application staff to focus on more strategic projects.

What I found interesting from the Cutter survey was that high levels of satisfaction (an amazing 90%) found a year earlier had dropped a little (to a still highly positive 80%) in 2006. Jeff attributes this to the emergence of new vendors targeting a high-growth market with solutions of varying quality, and users adopting SaaS without a thorough initial evaluation, with “exaggerated press reports and unrealistic vendor promises” setting high expectations that cannot be fulfilled.

Document collaboration

The Butler Group has also been talking about the impact of SaaS solutions, in relation to the document collaboration field. In a December 2006 report, Document Collaboration: Linking People, Process, and Content, it says the time has come for document collaboration to move beyond simple collaborative exchanges to sophisticated collaborative experiences, particularly with compliance issues requiring complete auditability of the lifecycles of documents (something I talked about last week in my second Prediction).

Butler points out that: “Users require access to collaborative applications from a diverse set of locations and client types. The traditional approach of installing a Windows-based application onto a desk-bound PC is no longer sufficient….” It goes on to suggest that e-mail and Instant Messaging are unstructured and uncontrolled, and that the hitherto immature document collaboration market will change “towards on-line, hosted/SaaS solutions, with the World Wide Web increasingly taking on a user-specific profile, enabling easy and seamless Document Collaboration, and challenging the domination of desktop applications”.

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