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SaaS 2.0: Software-as-a-Service as Next-Gen Business Platform

Document:                        SSR-239
Date of Publication:           April 26, 2006
Number of Pages:             34
Lead Author(s):                 Mark Koenig
Contributing Author(s):       B. Guptill, B. McNee, J. Cassell
Price:                               $1,295.00 USD (Single User License)

Report Overview:  Software-as-a-service (SaaS) is undergoing a fundamental shift in how software is acquired, used and paid for. Emerging SaaS models and offerings are taking the SaaS concept far beyond first-generation application functionality and deployment, and into mission-critical business operations for large and small firms. And contrary to conventional wisdom, the smallest firms are the most likely to commit business-critical operations to SaaS-delivered applications.

Saugatuck Technology has defined this emerging, business-driven model of integrated software and services as "SaaS 2.0," and sees it as one of the most disruptive forces in IT and business management worldwide. 

SaaS 2.0: Software-as-a-Service as Next-Gen Business Platform explains what is happening in SaaS, and how it affects both user and vendor firms. The report provides insights and analysis on the forces driving SaaS adoption, including the business motivators for user and vendor firms, and the expected business impact of SaaS adoption. The report also provides frameworks for optimizing next-generation SaaS provision and usage.

This research project is a continuation of our research begun over two years ago with our report “Pay-As-You-Go IT Services: Where’s the Business Value?” This latest effort included detailed telephone interviews with over 40 senior IT executives, a web-based survey of over 150 business and IT executives, and briefings from more than a dozen IT vendors and venture capitalists. The research was conducted between January 2006 and March 2006. 

Research Summary:   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.

Press Release / Media & BLOG Coverage
 

03-12-07 SaaS Hits the Hockey Stick (Zdnet/P. Wainewright Weblog)

03-02-07 Saugatuck Founder McNee to Host SaaScon Keynote Interview with Workday Executives (Saugatuck Press Release)

SAAS: More, Not Less, Channel (eWeek)

10-12-06 Saugatuck's McNee to Keynote Software Business 2006 Conference October 17th 2006

10-02-06 Innotas Rides 'Software As Service' Trend (Inside Bay Area)

09-26-06  Get Ready For SaaS 2.0  (Internet News)

09-25-06 SaaS Experts Predict 20 Percent Growth (PC Magazine)

09-20-06 SaaScon: First-Ever Event Already Considered The Central Gathering ... (BusinessWire)

09-04-06 When SaaS Meets Offshoring  .  (GlobalServices)

08-25-06 Saugatuck's McNee to Keynote SaaScon Conference: Software-as-a-Service Morphs into BSP Platform

08-22-06 Software as a Service as Next-Gen Business Platform (DMReview)

08-11-06 Employease Customizes Software-as-a-Service (Internet News)

08-02-06 SaaS Economics (Computerworld)

07-17-06 Software-as-a-Service Fosters Collaboration (Application Development Trends)

What Does Software-as-a-Service Mean for Business Intelligence? (Business Intellligence Network/Collin White)

Part 5: Software Simplified - The Next Technology P-Wave (CharterStreet Blog)

SaaS 2.0 Will Change Your Business (ZDNet Blog/Phil Wainewright)

SaaS 2.0: Next Generation Business Platform (Sadagopan's Weblog)

Getting Ready for SaaS 2.0 (dotnetSaaS Weblog)

Sandhill Talks SaaS 2.0 (Accmanpro Blog)

Get Ready for SaaS 2.0 (Sandhill.com)

SaaS 2.0: Saugatuck Study Shows Rapid SaaS Evolution to Business Platforms  

Executive Summary

SaaS 2.0: Executive Summary

Listen to Podcast (MP3 format)

12-15-06 The Disruptive Power of Software as a Service (Ziff-Davis Podcast - 20 min)
SaaScon Podcast Advantage Series: McNee Interview with Paul Gillin July 29, 2006
Podcast: SaaS 2.0 Report Overview April 27, 2006 (PRWeb)

Read This Report To Learn:

How rapidly is SaaS growing, and what are the key business and technology factors driving (and inhibiting) adoption  - across different customer segments? 
Which applications are leading customer adoption, and what are the reasons companies are looking to SaaS solutions in those categories? 
What are the key attributes that buyers are looking for in their SaaS providers, and the type of SaaS solution provider that buyers are most likely to deploy? 
How vendors will evolve to solve the key IT ecosystem needs for SaaS integration and SaaS distribution? 

Table Of Contents:
 
Section 1: Introduction: SaaS at the Tipping Point 
Section 2: What Makes this SaaS 1.0? 
Section 3: SaaS 2.0: What’s Coming?
Section 4: Tipping Points: What’s Driving the Shift to SaaS 2.0?  
Section 5: Summary/Conclusion: The Impact of  SaaS 2.0  
Appendix

List of Figures and Sidebars:

Sidebar: SaaS versus ASP
Figure 1: SaaS Adoption: Current State (by Company Size) 
Figure 2: SaaS Drivers
Figure 3: Preferred SaaS Vendor Attributes
Sidebar: Venture Capital and SaaS Investment
Sidebar: What about service Outages? The Importance of SLAs 
Figure 4: Software-as-a-Service Evolution 
Figure 5: How SaaS Will be Used  (by Company Size) 
Figure 6: SaaS Adoption by Category  
Figure 7: The SaaS 2.0 Provider Spectrum 
Figure 8: SaaS Vendor Preferences (by Company Size) 
Sidebar: SaaS Vendor Types 
Sidebar: SaaS and the Future Application Environment 
Appendix: Saugatuck SaaS Survey Demographics 

Related Research

03-21-07 Cisco + WebEx = A New SaaS Master Platform? (M. Koenig, M. West, B. McNee, 3 pages, RA-330)
03-07-07 One Year Later: SaaS Breaks Out ( M. Koenig, 2 pages, RA-326)
02-28-07 Niche SaaS Markets Heat Up As Master Brands Begin To Weigh In (M. West, M. Koenig, 3 pages, RA-323)
02-22-07 IT Insights and Trends: On the Road to Utility Computing - How Far is Far Enough? (C. Burns, 5 pages, STR-321 $$$)
02-07-07 Progress Software: Pointing Toward SaaS 2.0 (M. West, 2 pages, RA-318)
01-31-07 IBM SofTek Acquisition Plays to SaaS 2.0 and IT Spending Trends (B. Guptill, 2 pages, RA-313)
01-17-07 Workday Goes To Market with its New Breed of HCM and ERP (B. McNee, M. West, 2 pages, RA-309)
01-16-07 Workday: A Year-end Chat With Dave Duffield and Aneel Bhusri (B. McNee, M. West, 8 pages, EVT-308, $$$)
12-28-06 SaaS 2.0: Six Key Trends for 2007 (M. West, B. McNee, 6 pages, MKT-303, $$$)
12-20-06 Diamonds in the Rough: Shifting Enterprise Strategies for Deploying Applications and Business Process Functionality (E. Keller, B. McNee, 3 pages, RA-302)
12-19-2006 SOA, SaaS, Open Source, and Utility Computing: Managing the New IT Portfolio (C. Burns, M. West, 4 pages, STR-301 $$$)
12-14-06 Open Source: 2006 Strategic Growth Kick-Starts a Hot 2007 (B. Guptill, 2 pages, RA-300)
12-12-06  Matching Sellers to the Enterprise Application Market Diamond (E. Keller, B. McNee, 8 pages, MKT-299, $$$)
12-06-06 Four Trends in One Merger: Business Objects Buys NSite (M. Koenig, 3 pages, RA-298)

11-22-06 SaaS 2.0 In Action: AMEX-Reardon Commerce Launch AXIOM eMarketplace (B. McNee, 3 pages, RA-293)

10-26-06 Salesforce Dreams Big at Dreamforce as SaaS Looms Large (M. West, B. McNee, 9 pages, EVT-284 $$$)
10-26-06 Salesforce Announces Further Expansion of its Strategy at Dreamforce (M. West, B. McNee, 2 pages, RA-283)
10-20-06 SaaS and SOA on a Collision Course in the SOA Enterprise (West, Guptill, McNee, 5 pages, MKT-282 $$$)
09-27-06 SaaScon and WebEx: Trip Report Highlights (McNee, 4 pages, RA-276)
09-27-06 What are Multi-Tenancy and Hybrid-Tenancy? And Why Should SaaS Buyers Care? (West, McNee, 5 pages, STR-275, $$$)
09-20-06 SaaS Assessment Checklist: Flexibility and Choice are Key (McNee, 2 pages, RA-272)
09-13-06 Challenge and Response: Saugatuck Principals Debate Google’s Impact (Koenig, Guptill, 4 pages, MKT-270, $$$)
09-05-06 Microsoft Vista Licensing: Reflecting Market Realities (Guptill, 2 pages, RA-269)
08-30-06 New Software Licensing and Delivery Models Gaining Momentum (Koenig, 2 pages, RA-268)
08-30-06 August 31, 2006 Evolving Security to Meet the Needs and Vulnerabilities of SOA (West, 4 pages, MKT-267 $$$)
08-23-06 Recent Deals Help Move Software Boundaries from Applications to Business Processes (West, Burns, 2 pages, RA-265)
08-16-06 Surmounting Short-Term Barriers to SaaS Integration (M. West, 4 pages, MKT-262  $$$)
08-09-06 NetSuite and CompUSA Dig New Channel for SaaS Applications (Koenig, 2 pages, RA-260)
07-19-06 SaaS Integration Platforms: The Looming SaaS Deployment and Support Dilemma (West, 6 pages, STR-255, $$$)
06-28-06 Microsoft Unified Communications: A Key Step Toward Mass-Market CPM? (Guptill, 3 pages, RA-251)
05-31-06 On Demand-SaaS Panel: Evidence of Market Evolution (McNee, 3 pages, RA-246)
05-03-06 SaaS 2.0: Seven Key Software-as-a-Service Trends (McNee, Guptill, Koenig, 5 pages, RA-240)
04-28-06 Enterprise Upgrades: The Next IT Innovation Tsunami? (Keller, 4 pages, MKT-238, $$$)
04-12-06 Software 2006 - Trip Report Highlights (Guptill, McNee, 4 pages, RA-235)
04-5-06 Is Advertising Supported Software Ready for Prime Time? (Koenig, 3 pages,  RA-234)
03-08-06 SMBs Surpass Large Enterprises in SaaS for Critical Applications (Guptill, Koenig, 2 pages, RA-229)
02-08-06 Saugatuck Research Points to Success for Software-as-a-Service Offering from SAP and Other Traditional Software Vendors (Koenig, 2 pages, RA-224)
11-16-05 Software-as-a-Service: Survey Results Support Industry Trend Toward Disruptive Business Model (Koenig, McNee, 2 pages, RA-208)
 
Enterprise Social Computing
Great Expectations
An ISV Cookbook
Open Source Changes
SMBs and SaaS Adoption
Saas Ready – Drill Down
Saas - Ready, or Not
Faces of Virtualization
Open Source SW
SaaS 2.0: Tipping Point
C-Team: Growth
SOA Reality Check
The IT Utility
SaaS 2.0
Outsourcing Transfd
The IT Utility
Pay-as-you-go IT
UC: A Hard Sell

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