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Article

Title: $aa$: Friend or Foe?

Author: Driscoll, Sara Article Type: Product Analysis
Source: eWeek, v25 n6 pSP7(4) Publication Date: Feb 18, 2008
  ISSN: 1530-6283
URL of Publication: http://www.eweek.com

Remotely hosted applications, or software-as-a-service (SaaS), have also been marketed as application outsourcing and on-demand software. The SaaS business model is still being defined along with how solution providers can profit from SaaS. Currently, value-added resellers (VARs) of traditional on-premises software charge for installation, applications maintenance, and any extra development, integration and customization that might be required. With no on-premises installations to charge for, however, SaaS solution providers will have to sell enough software at fees high enough to generate profits and low enough to accommodate customer budgets. In addition, enterprises may not agree to give up their on-site control of business-critical applications. Companies are wondering if SaaS is being adopted worldwide or if it's confined to mature markets only. SaaS solution provider Ready2goIT in the UK is experiencing significant demand among midmarket customers, although their cost savings usually come from needing fewer employees to manage the software and they are reluctant to let people go. Also in the UK, managed services provider VAR Ramsac states that SaaS customer demand 'remains nonexistent.' Market research company Gartner is expecting 25 percent of 'new software will be delivered as a service by 2011.' A study by IDC concluded that over 70 percent of the International Association of Microsoft Certified Partners considers SaaS an opportunity. Forrester Research, however, believes SaaS is only 'at the beginning of a curve,' with only about 15 percent of U.S. companies currently evaluating SaaS options and scenarios. Forrester and Gartner agree that SaaS adoption is market-specific. For example, SaaS revenue in customer relationship management (CRM) is expected to increase 26 percent per year until 2011. However, SaaS revenue in supply chain management (SCM) is expected to grow only 9 percent by 2011.

Companies:
Forrester Research Inc Gartner Group Inc
IDC Microsoft Corp
ramsac Ltd Ready2goIT Ltd

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