Nearly half of independent software vendors (ISVs) are offering products on a software-as-a-service (SaaS) model rather than via traditional product sales, according to hosting firm Rackspace.

A recent survey of ISVs attending a Rackspace Hosting conference on SaaS found that 48 per cent already have a SaaS strategy and products in place, or are developing SaaS applications to run alongside existing solutions. Only 15 per cent had no defined SaaS policy.

However, when asked to identity the difficulties of moving to this new model, the majority cited the shift from a one-off high-value product model to a long-term low-value subscription system as a major sticking point.

"There is a significant move towards SaaS, and those businesses that are not making the move are at risk of being left behind," said Rackspace marketing director Fabio Torlini.

"One of the big challenges for Rackspace is to help ISVs make the transition to a profitable SaaS business model. Developing the right hosting strategy is a crucial part of that equation."

When it came to delivering their SaaS platforms, an equal number of respondents picked managed hosting or in-house hosting (37 per cent for both), while eight per cent already use cloud technology to host SaaS offerings.

Many companies are hailing SaaS and other managed services as a way to minimise capital expenditure in a tough economic climate, and instead move the payment of certain vital functions to a predictable and regular monthly operational expense.

This sentiment is reinforced by organisations such as Microsoft, Amazon, CA and Capgemini, all of which have announced new SaaS products and development tools.