Forrester: SaaS To Impact 6 Key Software Categories Including Business Intelligence [RESEARCH]

As more and more companies are moving towards introducing SaaS versions of their products, they have begun what could be a very significant shake-up in the contemporary software market. I think it goes without saying that the uptake of SaaS is going to increase over the years to come, and this is going to present challenges to several groups. Perhaps the biggest difficulty will be the varying levels of adoption across the market - in some areas SaaS will be considered a "disruptive technology" and in other "the only option". It may be that sometimes SaaS adoption will have little impact on software offerings.

Forrester recently analyzed more than 120 software solutions. They recorded the extent to which these products are already being offered in SaaS form, and the likelihood of switching to SaaS in the future. They state that overall, SaaS will more than double from 7% of software investment in 2010 to 16% in 2013. It is no surprise therefore that the number of SaaS solutions will change during this period across the product categories assessed. So where has SaaS become (or not become) a significant factor in the software market?

1. Business Intelligence

Analytics apps are difficult to switch to SaaS because of the complexity of solution, data sources and integration, and a need for processing power. That's why solutions which are born and built in the cloud (like Bime!) are leaders in SaaS innovation. Currently, most business performance, predictive and text analytics, and event processing will continue to take place on-premise. However, some BI solutions are moving towards SaaS already — and more will deploy SaaS versions in the near future.

2. IT Management Applications

Despite the threat of job loss to the cloud (like we talked about in our recent article about how Cloud Computing & Web Services are changing the IT job market, IT is increasingly aware that cloud solutions can save money and allow workers to focus on building the business in other ways. SaaS is therefore gaining market share in several IT management software categories and looks like it's probably here to stay.

3. CRM Software and productivity apps

SaaS is well-suited to desktop and collaboration applications. Their broad user base — including employees, customers, and partners — makes accessibility very important. Some features of CRM that hinder SaaS adoption include a large amount of data, high security, and varied maturity of products. Although blogs and wikis are almost fully SaaS, and email and collaboration are following, content management programs are still relying mainly on traditional in-house services.

4. ERP and Supply Chain Software

Very few ERP and supply chain functions have taken on a SaaS model, and it seems that not many are likely to change over the next few years. Many of these categories are still seen as too mission-controlled, custom, or heavily integrated to successfully leverage SaaS. That's not to say that no ERP software has gone SaaS - exceptions would include ePurchasing and eProcurement.

5. HR Software

SaaS is already becoming a principle technology for HR products. In the case of HR programs, the user-friendliness and accessibility of SaaS allows for easier collaboration across levels and departments. Some already SaaS-heavy software categories such as recruiting, performance management, and eLearning will become even more SaaS-controlled by 2013.

6. Platform and Middleware Solutions

These categories are still dominated by on-premise vendors, and are likely to stay that way for the near future. Some key reasons: speed and performance issues, degree of customization, and integration. Only a few categories — governance, risk and compliance, application development, and storage for example — show signs of SaaS adoption.

In light of increased movement towards SaaS, everyone must prepare for a situation where SaaS co-exists with on-premise solutions, with a wealth of new vendors in the market. Additionally, it will be important for sourcing professionals to create ways to compare the cost and value of SaaS with more traditional models when making the decision to purchase.

Forrester Research published a report earlier this month encouraging companies to deploy cloud-based business intelligence. According to authors James Staten and Lauren Nelson, such BI solutions can offer a simple, low-cost way to get familiar with advanced analytics, often in a customized manner. It’s great to see even analyst firms with largely prudent clients pushing them not only to step up their data efforts, but to do so in the cloud, proving once again that the cloud is here to stay.