SaaS is cloud computing’s quiet killer app

David Linthicum| Infoworld

Salesforce.com claimed that Dreamforce had about 120,000 attendees last week, which — in our own Caroline Craig’s estimation — sounded a “bit high.” I agree, but it’s hard to argue the conference was big — bigger than last year, I’m sure.

It’s also a good sign that SaaS is alive and well. It’s driving much of cloud computing these days, yet SaaS doesn’t get much notice in all the talk about cloud computing.

Instead, those of us in the thick of cloud computing would rather talk about the shiny, new objects in the IaaS and PaaS clouds. I’m as guilty as my colleagues on this count.

Truth is, most of those who leverage cloud-based technology do so with SaaS providers, such as Salesforce.com and others. Moreover, most enterprise software players have SaaS versions of their offerings.

As seen in the accompanying figure, SaaS will continue to dominate most public cloud computing sales. However, it’s shifted from 69 to 58 percent of the market, as reported by Capgemini TME Strategy Lab. At the same time, the total market has increased from $17.4 billion in 2009 to $44.2 billion this year.

The decrease in market share is due to the growing use of both IaaS and PaaS. However, SaaS remains the largest portion of the cloud computing market, even if it doesn’t inspire much chatter.

The ability to subscribe to key applications and business processes is an attractive idea. It was 10 years ago when SaaS began to reemerge from several failed attempts in the ’90s (that’s right, Salesforce.com did not invent SaaS). These days, most enterprises wouldn’t think of hosting their own enterprise CRM system as long as Saleforce.com is around. Moreover, there are ERP systems, HR systems, inventory systems, and so on, all delivered as SaaS. It’s forever changed how we consume software.

SaaS isn’t as sexy as the other areas of cloud computing, but it continues to be the largest and perhaps the most important for many enterprises. We shouldn’t lose sight of this fact as the cloud computing market continues to mature.

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