Software-as-a-service (SaaS) has failed to deliver on market expectations because of its high costs and lack of customisation.
This is the view of Greg Montjoie, manager of hosted solutions at Internet Solutions, who claims the only players that have gotten SaaS right are the infrastructure service providers.
Montjoie was speaking at the ITWeb Virtualisation and Cloud Computing conference in Bryanston, yesterday, on delivering SaaS through virtualisation.
“Is SaaS really SaaS? The short answer is no, what we have been delivering instead has actually been software-infrastructure-as-a-service.
“Typical services in this format are e-mail, shared hosted services, SharePoint, fax, and IP telephony. Infrastructure providers have made it successful, but I don't think that we've delivered SaaS to the market in terms of what its initial promises were.”
According to Montjoie, the biggest barrier enterprises face when implementing SaaS is that the business needs massive economies of scale to get the SaaS platform to work. It is also capital intensive.
Montjoie added that SaaS is complex to manage and requires highly specialised skills to create SaaS environments. He noted that SaaS solutions are not very customisable and that risk was a barrier to entry for companies.
However, Montjoie maintained that the industry is not flogging a dead horse and that there are still SaaS opportunities the major tech vendors are investing in. He said Microsoft and Dell have shown interest in SaaS following big investments and acquisitions by the two companies. In addition, VMware recently acquired SaaS vendor Zimbra.
“The SA market is getting to a place that's ripe to offer SaaS services to the local community. And we are seeing this being driven by faster, cheaper and more reliable bandwidth coming in the country. SaaS price per user model has traditionally been high, but the ecosystem in SA has evolved to deliver SaaS solutions in an innovative way,” he noted.
Montjoie predicted that there will be a liberation in the SaaS market. He explained that SaaS needs to merge with Cloud 2.0 concepts and on mobile devices to drive flexibility, agility and cost effectiveness in the business environment. However, he noted that vendors will be taking a piece-by-piece approach rather than a 'big bang' approach to SaaS.
According to global research firm Gartner, worldwide SaaS revenues in the enterprise application software market will surpass $8.5 billion this year.
The forecast means the SaaS market has grown by 14.1% compared to 2009 revenues, which the analyst firm says totalled $7.5 billion.
This compares with figures released last November, which confirmed the 2009 revenue figures, and highlighted a rise in market growth to $6.4 billion in SaaS sales worldwide in 2008.
The research firm says worldwide cloud services revenue is forecast to reach $68.3 billion in 2010, a 16.6% increase from 2009 revenue of $58.6 billion. The industry is poised for strong growth through 2014, when worldwide cloud services revenue is projected to reach $148.8 billion.
Gartner estimates that, over the course of the next five years, organisations will spend $112 billion cumulatively on SaaS, platform-as-a-service, and infrastructure-as-a-service, combined.
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