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12/27/2007
11:44 AM
David Linthicum
David Linthicum
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SaaS Predictions for 2008

It seems that everyone is putting up predictions for 2008, so why should I be an exception? Here is what I think will occur in the world of software as a service this New Year...

It seems that everyone is putting up predictions for 2008, so why should I be an exception? Here is what I think will occur in the world of software as a service this New Year:1. Hotter space for investors. While the recent IPO of NetSuite brings more people to invest in SaaS, with Saleforce.com taking the lead, this space will continue to be interesting for both VC and now retail investors. Clearly, the "trend" of moving business processes outside of the firewall is continuing, but it's really more of a driving systemic change in the way in which we do computing, or, perhaps, a retro-move back to timeshare services of many years ago. Whatever, take your pick, but it's occurring.

2. Integration issues become the largest impediment to SaaS. As more companies move toward SaaS, the more they will find the need to link their new SaaS applications with their existing data. While many consider integration when selecting a SaaS solution, most don't, and end up figuring things out on the fly…not a good approach. Successful integration can only occur with a lot of planning, and linked back with an overall enterprise architecture/SOA strategy.

3. Some of the larger SaaS customers will fail. While some organizations are moving toward SaaS with a clear eye on the impact on the business, positive and negative, many others are "managing by magazine" and going toward SaaS with a clear sensitivity toward the hype, but not the business realities. Thus, many may and will find that SaaS is not a fit, thus they fail in using SaaS within that particular enterprise. Not a failure of SaaS, but a failure of understanding the core requirements, and the business itself.

4. SaaS ROI becomes clearer. While we know SaaS is cheaper, we have not had a lot of history to determine the true savings over traditional enterprise applications. However, in 2008 we'll find many case studies that reveal how much SaaS is saving a few of the major players. Typically they will find the savings from software license costs is huge, but will also find that less understood benefits such as support, maintenance, operations, and hardware will provide more ROI for those moving toward SaaS. In most instances, the savings will be more than expected.

5. More consolidation. The hype and momentum behind SaaS, and the desire for many "traditional enterprise software players" to stay in the game, will drive more buying of privately held and publically held SaaS players. This one is very easy to predict.It seems that everyone is putting up predictions for 2008, so why should I be an exception? Here is what I think will occur in the world of software as a service this New Year...

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