Is enterprise software moving into SaaS?

Is enterprise software moving into SaaS?

The enterprise software is growning 6,4% YoY and the SaaS for about 22% YoY. Do you believe that the transfer into SaaS will be inevitable?

I made this question on Linkedin and really the answers from experts where amazing. Please take a look at some of them and join our conversation here:

Jérémie RENAUDINEAU Indeed very good question, my opinion is that this is just a matter of time. When the gap between TCO of on prem VS SaaS system will be even larger, there will be no choice but moving to SaaS in order to maintain margin level and remain competitive.

Rajeeb Banerjee Are we suggesting that eventually there will be similarity in how businesses run worldwide? What could happen is enterprises will go in for PaaS and develop their own applications as needed.

José Sánchez Montojo Great question Christos Mantzikos, SaaS computing is strongly developing specially in the recruitment sector and currently HR departments are looking for new solutions to maximise quality in their hiring while reducing the time and cost involved during the recruitment process. I think Saas will have a strong impact in the HR sector during 2016.

Bosco Moraes Saas adoption will continue to gain traction especially for apps like standard office based applications, security software and infrastructure related software apps.

Robert Hoeksema inevitable, especially for SME. However, there will always be customers that want to own it all….alternative models are and will continue to evolve (SaaS, PaaS,etc)

Dimitris Kalogeros That’s a very good question Christos Mantzikos . My opinion is that although there is great transition towards the SaaS model, enterprise software will still exist at some extend. With things moving that fast in the IT field we might experience different models in the future as well.

Anthony Clarke I am inclined to think, yes, I do see this growing strongly but I agree with Dimitris Kalogeros that it will never completely replace enterprise solutions deployed on customer sites. Just look at the mainframe and how slowly it declined.

James Masters Only if all the core IT services are available and their is an easier migration from their existing infrastructure.

Xiaoye Fu I think yes. But the progress will be very complicated.

BRYAN SOCRANSKY, MBA Yes. The old days of enterprise software are numbered. Not only does SaaS provide a more attractive opex vs. capex model but it also fundamentally changes the relationship between the software vendor and the customer. In the old enterprise software model the vendor got paid a big capex amount $ once the software went live and then they got paid a small amount for maintenance and support going forward. With SaaS the vendor is more heavily invested in ensuring the customer is successful otherwise they will not renew their subscription. Customers don’t want to go back to the old model

Patrick Kearns The 3:1 growth ratio and companies like Microsoft and Oracle moving their resources to SaaS there is no room for an argument

Greg Portis Yes, its a matter of evolution; the move toward maximum efficiency requires enterprise customers reduce their infrastructure investments, and the need for competitive survival by the enterprise vendor community
requires new and recurring revenue streams. The inflection point where it really takes off is at the point that general availability of Office 16 and Exchange is announced. En masse, all the other enterprise vendors will follow at that point. Customers that insist on requiring future releases of enterprise editions will pay a staggering amount for maintenance and support going forward. From an investment standpoint, I would go short on the guys that develop Windows Installers.

Patrick Kearns The SaaS business model is difficult for HW vendors as they are used to seeing revenue recognition at the time of sale. SaaS delays revenue recognition so there is a GAP in revenue for reporting sales and revenue purposes.

Tony Lorge 22% off a very low base probably equates to a very small real growth rate compared to a 6.4% of huge and mature legacy market but that said both are likely to enjoy continued penetration in the enterprise space especially as revenue models for on-premise, hybrid and SaaS start to merge i.e. able to buy on-premise or hybrid solutions on a subscription as well

Patrick Kearns I expect to see a mass migration to SaaS. The Qtr. Financial statement and earnings report from HP says they are moving to SaaS for several of their SW GTM plays to keep pace with the market trend.

Freud Oliveira Yes, in the short-mid-term. Like any other IT wave we had in the past, the current move is toward the SaaS Model. This takes us to the next big question is: how long the SaaS Model will last?

Peretz Cohen It really depends on the control IT has over such issues and management’s view, albeit limited, of the implications of transferal.

Balachandran Alathoor Yes. I believe so. Market dynamics will drive Enterprise software to move to SaaS to stay alive or maintain their market share.

Ramkumar T Yes , well against the myth that Australia does not have much manufacturing yet the trend to adopt an optimized infrastructure and the operational excellence warrants a transition . The trend is visible in smaller organization involved in document storage and retrieval as well. the retail and distribution companies are augmenting their infrastructure and services to the latest offering

Quinten Schultz I think so, it makes sense. It saves space. I don’t think it will happen all at once though.

Salvatore Gioffreda With Saas enterprises have new opportunites to growth it’s business but it depends on the current enterprises conformation and their plans on the software. May be that a Saas solution is the best choice where there isn’t enought IT infrstructures or IT crew to guarantee software deployment and Business Continuity. On the other hand if software has no wide availability needs (for example it serves only few persons/offices) an onPrem solution still may be the right (cost-effective) choice. Actually with Saas new enterprises or new lines of business have the opportunity to omit ‘direct’ IT investiments and concentrate on software development. o this trend is really fast in new enterprises or business but slow where IT units are still considerable, but will quicken with IT units disposal.

Vincent BERTIL I think so, with the SaaS the initial coast are lower and the software is ready to run the instant you sign the contract. With a simpler implementaton, you can focus more on you business.

David Skyberg If the question is whether enterprise software vendors will be forced to migrate to SaaS, the answer is unequivocally yes. Try to find a vendor that hasn’t already developed or plans to develop SaaS based offerings comparable to their on-premises offerings.
It will be quite a while before we see vendors abandon their on-premises offerings. But, clearly, market pressure and competitive realities are dictating at least parallel SaaS efforts. If the question is whether enterprises will migrate away from on premises software to SaaS , the answer is still yes. Of course there are still barriers to adoption. Especially when regulatory compliance is a driving factor. And, of course there are areas where outsourcing is not a realistic strategy. But even there, the trend is n’t to acquiesce, but to keep chipping away at them over time.
The right lens is not “when WILL it all go to SaaS”, but rather “when CAN it”.

Eckhard Ortwein At, we are seeing exactly that happening. Software vendors – large and small – are moving to a new delivery model to provide their software ‘as-a-service’. However, transitioning to a new subscription based business model gives them a headache because they are facing a cash flow gap which is hard to compute.

Salvatore Gioffreda I put another point of view to measure the speed of this quite unrestrainable migration.
It is the collective immagination about Saas security. In special manner when they are moving data accross countries with different laws.
In my experiece I’ve found a real distrust when the ‘old-style Enterprise’ CEO are at the point.
Each Saas vendor puts great effort to ‘guarantee’ that Saas solutions are the best even in security and really they are.
Unfortunally when you have in your company warehouses full of people and servers, security poin is the perfect alibi to just displace the problem ahead. Whatever the benefits.

Naveen Goud Already, it has moved in my view. But still some issues are hindering the full scale approach. Security is one such factor.


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