Analysts say impact of SaaS might be overstated

The majority of software vendors have little to fear from the rise of software-as-a-service (SaaS), according to analysts at Forrester Research.

Andrew Bartels and Liz Herbert concluded in a recent report that SaaS platforms have the ability to disrupt only about a quarter of the overall market.

"SaaS will be a disruptive force in software products that make up about 25 per cent of the total global software market, especially in customer relationship management, human resource management, IT management and security software," the analysts wrote.

"Elsewhere, SaaS will be a sustaining technology for incumbent vendors that allows them to offer SaaS products that complement traditional licensed software products, either in niches where licensed products have not been adopted or by addressing unmet needs."

SaaS software does have a bright outlook overall, however. The report estimates that the share of total software revenues being claimed by SaaS markets will grow from seven per cent in 2010 to as much as 17 per cent in 2013.

Forrester found that three quarters of the 123 distinct software products studied do not appear to be potentially disruptive markets for SaaS products.

The analysts noted factors such as security concerns, integration troubles and worries over a lack of customisation in helping to keep SaaS platforms out of many parts of the market.

"While SaaS providers and standards bodies are working hard to address security concerns, integration challenges and customisation capabilities, the actual and perceived limitations will persist for a while for SaaS products in these areas," wrote the analysts.

"When any one of these factors is important to buyers of a specific software product, SaaS adoption will be low."