SaaS to crush traditional software models

Software as a Service (SaaS) is quickly moving towards a dominant position in the software market, according to latest research.

In fact, by 2012, it is estimated that less than 15 percent of new software firms coming to market will ship a packaged product on CD. Those are the findings from a study by IDC that also reports that 34 percent of all new business software purchases will be consumed via SaaS by 2014, and SaaS delivery will constitute about 14.5 percent of worldwide software spending across all primary markets.
“The SaaS model has become mainstream, and is quickly coming to dominate the planning – from R&D, to sales quotas, to partnering, channels and distribution – of all software and services vendors,” says Robert Mahowald, vice president, SaaS and Cloud Services research at IDC.
“Enterprise IT plans are rapidly shifting to accommodate the growing choices for sourcing most or all IT software functions, from business applications to software development and testing, to service and desktop management, as SaaS services become available from established vendors and new models for accessing functionality in the cloud creates lower-cost options and more tailored models for consuming IT services.”
IDC states that the SaaS market had worldwide revenues of $13.1 billion in 2009. IDC forecasts the market to reach $40.5bn by 2014, representing a compound annual growth rate of 25.3 percent.
The firm also reports that traditional packaged software and perpetual license revenue are in decline, and predicts that a software industry shift toward subscription models will result in a nearly $7bn decline in worldwide license revenue in 2010. As a result, a permanent change in software licensing regime will occur.