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Reportlinker Adds The Future of Software Delivery: The opportunities and challenges of emerging software delivery models Report

The Future of Software Delivery: The opportunities and challenges of emerging software delivery models

The Future of Software Delivery

The opportunities and challenges of emerging software delivery models

Report Overview

The way companies perceive and purchase their software is starting to change. Organizations no longer have to buy an on-premise application and host it on site, they can have it delivered on-demand, as a service or hosted by the software provider or a third party. But while these new models offer more choice in how they pay, receive and use applications, the proliferation of terms has led to some confusion amongst organizations about what they are and what they constitute. ‘The Future of Software Delivery: The opportunities and challenges of emerging software delivery models’ is a new report published by Business Insights that examines the market conditions that led to the emergence of these new models and the benefits they offer over traditional delivery types. This report also examines future market opportunities for software delivery models and how they may be extended to hardware platforms in the future.

Key Findings

The size of the on-demand CRM market will increase rapidly through 2009 to reach 27% of total market size as the CAGR for on-demand far exceeds that for the total CRM market.

There are signs that enterprises with revenue of more than $1bn are also adopting more SaaS (Software as a Service) applications. Originally some industry commentators predicted SaaS would not expand beyond SMBs into larger organizations.

A study by Triple Tree and the Software and Information Industry Association (SIIA) found that on-demand deployments were 50% to 90% faster, with a total cost of ownership five to ten times less than installed software.

The growth rates for on-demand CRM and ERP application markets are significantly higher than for the premise-based market. This is an indicator of the high levels of growth potential in the market.

Use this report to...

• Identify and target future growth areas of on-demand CRM using this report’s analysis of new market opportunities by sizeband, vertical and region, as well as market forecasts for key sectors.

• Understand the key issues in the software delivery market including vendor ecosystem, competitor offering and on-demand vs on-premise deployments.

• Enhance your sales and marketing strategies with this report’s comparison of different vendor strategies and recommendations on improving your go-to-market strategy. • Assess emerging software delivery models with this report’s cost analysis of implementing software via different models.

Explore issues including...

On-demand is often used interchangeably with SaaS, but it’s also a bigger concept in its own right, referring to a new way for organizations to respond faster to customer demand, build new partnerships or react to market changes.

Vendor ecosystem. At the moment there is no single vendor leading the market for SaaS delivered solutions. Jostling for dominance in this market are traditional applications vendors, infrastructure vendors, pure play SaaS vendors and services providers.

SaaS in the enterprise. SaaS looks set to continue pervading the enterprise, whether through those application areas that suit Internet-based delivery, such as web conferencing and collaboration tools, to those that were previously considered as necessary to be kept behind the firewall: helpdesk, back-up software, word processing, spreadsheets, slideshows, content management and even supply chain management software.


• What’s the difference between SaaS and traditional on-site implementations?

• Will any of these alternative software models become the primary way that organisations buy software?

• How is today’s hosting model different to the ill-fated ASP model of the 1990s?

• Where does hosting fit in and how does it differ?

• What are the limitations of these software delivery models?

• Who are the leading vendors in this space? And is there a market leader yet?

Table of Contents

The Future of Software Delivery

Executive summary 10

New software delivery models 10

The changing IT landscape 11

Future opportunities 11

Managed application hosting 12

Pitfalls of new software delivery models 13

Vendor activity 14

Chapter 1 Introduction 18

What is this report about? 18

Who is this report for? 18

Definitions 19

Application service provider 19

Hosted applications 19

Managed application hosting 19

On-demand 19

On-demand subscription fees 20

On-premise applications 20

Service-oriented architecture (SOA) 20

Software as a service (SaaS) 20

Chapter 2 New software delivery models 22

Summary 22

Introduction 23

Software as a Service 23

Characteristics of SaaS 25

Ownership 25

Location 25

Payment 25

Tenancy 25

Growth in the SaaS market 27

The market opportunity 27

On-demand 29

Growth opportunities for on-demand 30

Application hosting 31

The ASP legacy 32

Outsourcing 33

Cloud computing 34

Web 2.0 34

Concluding thoughts 35

Chapter 3 The changing IT landscape 38

Summary 38

Introduction 39

How did IT come to be delivered as a service? 39

The next big thing 39

Disadvantages of the on-premise model 40

Cost 40

Implementation 41

Support and maintenance 42

The benefits of new software delivery models 42

Lower IT costs 43

More manageable costs 43

Familiar pricing model 43

Faster and easier implementation 44

Less software needed 44

Easier upgrades 44

Faster time to value 44

Greater access to new applications 44

Stronger ties between IT and business goals 45

Easier to manage 45

Scalability 45

Disaster recovery readiness 45

Chapter 4 Future opportunities 48

Summary 48

Introduction 49

CRM: the starting point for SaaS and on-demand 49

CRM market opportunity 50

Other application areas being delivered as a service 51

The ERP market opportunity 51

Business intelligence (BI) 52

Email 53

Others 53

Hardware as a service 54

Vertical opportunities 55

Financial services 55

The on-demand CRM market 55

Vendor spotlight 55

The benefits of SaaS for manufacturers 56

SaaS delivered technology can support a range of business processes 58

Go-to-market recommendations 60

Public sector 64

The on-demand CRM market 64

Higher education 64

Benefits of SaaS for institutions 65

Higher education processes suitable for SaaS delivery 65

SaaS in operation 68

Go-to-market recommendations 70

Communications 72

The on-demand CRM market 72

Utilities 72

The on-demand CRM market 72

Regional opportunities for on-demand CRM 73

North America 73

Europe, Middle East and Africa 73

Asia Pacific 74

Central and Latin America 75

Chapter 5 Managed application hosting 78

Summary 78

Introduction 79

Trends influencing the hosted application market 79

More applications to be delivered through managed hosting 79

Managed hosting is growing vertically and horizontally too 80

Services as competitive differentiation for managed application hosting providers 81

Growing costs could limit managed hosting providers 83

Expect virtualization to help alleviate rising data center costs 83

Being more efficient could boost green credentials too 84

Chapter 6 The pitfalls of new software delivery models 88

Summary 88

Introduction 89

Customer concerns about new delivery models 89

Security 89

Infrastructure 91

Service levels 92

Regulatory concerns 92

Lack of customization 93

Culture 94

Challenge out-dated perceptions 95

Be patient 96

Challenges for software providers 97

Architecture 97

Service levels 98

Customization 98

Cost 98

Customer support 99

Security 99

Overcoming barriers to adoption 100

Educating the market 100

More applications needed 101

Stay flexible 101

Promote on-demand and SOA as related concepts 101

Conclusions 102

Chapter 7 Vendor activity and effective strategies 104

Summary 104

Introduction 105

Competitive landscape 105

There are no clear leaders in the SaaS market 105

Different vendors carry multiple SaaS product lines 106

Vendor offerings 107

Software providers 107

New-breed on-demand vendors 107

Traditional enterprise application vendors 112

Infrastructure providers 118

Amazon 118

IBM 119

EMC 119

HP 120

Dell 121

Sun Microsystems 122

Capitalizing on the market opportunity 123

Key success factors for successful vendors 125

Amount of configuration options 125

Target and expand the right processes 126

Develop SMB specific functionality 126

Vendors should focus on a small number of key selling points 129

Provide SaaS delivery to applications in a modular, expanding fashion 130

Vendors need to continue to educate the market about issues such as security 130

Configuration, configuration, configuration should be the mantra of SaaS vendors 131

Index 132

List of Figures

Figure 3.1: The hidden costs of on-site deployments 41

Figure 3.2: Advantages of the SaaS and on-demand delivery models 42

Figure 4.3: Relative opportunities for SaaS within SCOR process groups 59

Figure 4.4: Perceived inhibitors to SaaS adoption within manufacturing companies 62

Figure 6.5: Challenges for software providers 97

Figure 7.6: Key success factors for successful vendors 125

List of Tables

Table 2.1: A comparison of on-premise and SaaS delivery models 24

Table 2.2: Features of the on-demand delivery model 30

Table 2.3: Distinguishing between hosted and SaaS applications 31

Table 4.4: The CRM vs on-demand CRM global market, 2004-2009 ($m) 50

Table 4.5: The ERP vs. on-demand ERP global market, 2004-2009 ($m) 51

Table 4.6: Deployment of different software delivery models in higher education institutions 64

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The Future of Software Delivery: The opportunities and challenges of emerging software delivery models

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