Emerging Platform Wars in Enterprise SaaS
The Software-as-a-Service (SaaS) industry continues to grow rapidly. Over the past three years, revenues of the top 20 SaaS companies grew at close to 50 percent and 2007 saw several new IPOs in the space. The industry has also matured significantly in recent years. Both vendor offerings and business models have become more robust, while SaaS adoption has spread from small and medium businesses (SMBs) to large enterprises. Estimates indicate that the SaaS market could grow to more than $35 billion over the next five years, with significant penetration of SaaS in all major software categories.
The success of SaaS is driving broad change across the software industry. Today, customers are more aware of what SaaS has to offer, more comfortable with the reliability of SaaS solutions and keener to explore SaaS solutions for their businesses. Most SMBs and a growing proportion of enterprises use at least one SaaS application today. Software vendors, both large and small, are thinking about how to adapt to the new paradigms of the SaaS market, while a large number of developers across the world are moving to SaaS application development.
One of the most significant implications of this broad-based change is the emergence of a new kind of software platform. The increase in SaaS application consumption and development is driving the need for a new set of platform technologies built specifically to support SaaS. In this article we address some of the key questions surrounding this development, including how to define these platforms, the forces shaping this emerging marketplace and the implications for various stakeholders. As with the evolution of technology platforms in the past, we are beginning an exciting time for the industry, as a host of megavendors and startups engage in the emerging SaaS platform wars.