Innovation in the software industry is on the upswing, with Software as a Service (SaaS) being a key driver. The SaaS model is becoming mainstream and this has led to the rise of a new generation of SaaS platforms (also referred to in the industry as Platform-as-a-Service – PaaS).
This year’s survey of more than 850 enterprise software customers by McKinsey & Co in collaboration with the SandHill Group (www.sandhill.com) and the Software and Interop conferences showed increasing acceptance of subscription and on-demand models but more surprisingly, a high portion (74 percent) of enterprise customers favorably disposed to adopting SaaS platforms.
A battleground is emerging between traditional mega-vendors and the larger SaaS incumbents with customers almost evenly divided between the two in their preferred choice for SaaS platform provider.
The survey also found a bright spot for the software industry in the midst of consolidation and economic turmoil. Software spend as a portion of enterprise IT spend continues to increase on its way to 35 percent by 2010.