Monday, May 22, 2006

SaaS 2.0 relies on SaaS Integration Platforms (SIPs)

This research introduces the term SIP - SaaS Integration Platform. I have to admit to prefering the term IaaS.

Research released this week by Saugatuck Technology indicates that software-as-a-service (SaaS) is rapidly reaching a critical point in its evolution, and that enterprise software vendors may be left in the dust by emerging SaaS players who combine software, business process services, and technology integration and management.

“Users are already moving beyond SaaS as a cost-cutting tool, and expect vendors to expand and improve what SaaS can deliver for their business operations,” stated lead study author Mark Koenig, senior program director at Saugatuck. “We see the market at a tipping point between looking to SaaS as a cost-cutting software alternative, and planning their business growth around integrated business applications, processes, and services delivered via SaaS 2.0 platforms.”

“A surprising percentage of user firms, including SMBs, are ready and willing to move to SaaS 2.0 as soon as the vendors can provide it,” shared Bruce Guptill, a study co-author and Managing Director of Research at Saugatuck. “Unfortunately, most software vendors are still approaching SaaS as an alternative means of delivering their existing applications. Those vendors stand to lose significant market and wallet share by being stuck in the past.”

Saugatuck research findings in the study include the following:

• Traditional business drivers such as efficiency and customer service are clearly leading SaaS customer adoption. SaaS adopters have been primarily seeking to reduce software costs and improve service levels for business applications. But adopters increasingly discover that SaaS offers flexibility, customization, and configurability for specific business or market conditions.

• Key market drivers will evolve from today’s cost-effective software management solutions (SaaS 1.0) to enabling companies to change how they do business (SaaS 2.0). The business drivers for SaaS 2.0 will be about helping users transform their business structures and processes. In this way, SaaS 2.0 has the potential to have much in common with Business Services Provisioning.

• Sales channels (SIs, ISVs and VARs) will be critical to SaaS adoption growth, as users will still require application and data integration with their IT environments. Non-traditional channels (e.g., banks, telcos, web portals) will be key for many SaaS solutions.

• SaaS Integration Platforms (SIPs) – solution hubs that provide application sharing, delivery, and management solutions – will become critical to broader SaaS adoption. Three to four dominant SIP Master Brands will emerge by 2010, and will manage more than 30 percent of core SaaS offerings to users. Monitoring and billing capabilities will enable increasingly attractive pricing.

The complete research study, entitled SaaS 2.0: Software-as-a-Service as Next-Generation Business Platform, was published today by Saugatuck and is available on the company’s web site at

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