Venyu Blog

Software-as-a-Service (SaaS), continues to be an IT delivery disruptor — literally.

According to findings recently published on ZDNet by author Joe McKendrick, global market intelligence firm IDC expects that less than 15% of net-new software firms coming to market will ship a packaged product (on CD). By 2014, about 34% of all new business software purchases will be consumed via SaaS, and SaaS delivery will constitute about 14.5% of worldwide software spending across all primary markets.

Coupled with a compound annual growth rate of 25.3% and a market forecast to reach $40.5 billion by 2014, it means, in IDC’s field of vision that “increasingly large chunks of IT are being delivered in service mode, versus project-by-project, or application-by-application installed or built and maintained in the data center.”

Robert Mahwold, vice president of SaaS and cloud services research at IDC concedes that as enterprises are seeing a shift from on-premise to offsite IT software functions almost everything – “from business applications to software development and testing, to service and desktop management,” is apt to be under consideration by IT to be sourced to a SaaS service or platform.

Additional research by IDC finds that by 2012, 85% of new software firms arriving on the scene will be built around SaaS delivery and by 2014 about 65% of new offerings from existing ISVs will be delivered as SaaS Services.

Adding insult to injury (depending of course, on whether you deliver them this way currently), SaaS will also displace traditional licenses with IDC predicting that a software industry shift toward subscription models will result in a nearly $7 billion decline in worldwide license revenue in 2010. As a result, IDC suggests, a permanent change in software licensing regime will occur.

To say nothing, of course, of the permanent changes in IT embedded in clouds hovering just over the horizon.