Cloud Computing

Enterprise apps - how the game is changing

Enterprise apps business is in a flux. The popular opinion in the industry says the era of locked-in expensive deals with on-premise software behemoths is coming to an end.

Even on-premise vendors grudgingly acknowledge that cloud and SaaS are game changers. Many of them, SAP for example, see the enterprise business changing over next five years, and are preparing to tune into emerging market realities.

As we recently pointed out at JaxEnter, enterprises have begun to take baby steps towards cloud. A new survey of 485 companies published in Information Week’s March 29 issue, throws more light on the tug-of-war between on-premise and cloud-based software. Here are a few key takeaways:

1) The dissatisfaction with the hard-to-maintain on-premise software is a key driver in nudging enterprises towards the cloud. Fifty four percent of respondents say changing, upgrading, or optimizing existing applications consumes most of their time.

2) Post-recession budgetary pressures remain. SaaS and cloud are tempting as they promise faster deployment and lower costs.

3) The next 12 to 24 months will see enterprises buying SaaS apps for portals, collaborative workplaces, e-mail and shared calendaring apps. Interestingly, there would be more demand for SaaS versions of Business Intelligence applications than for CRM, a longstanding favorite of the SaaS business. It goes without saying that mission-critical apps like ERP will resist SaaS longer.

4) SaaS advocates have good numbers to showcase. Google Apps have more than 2 million business customers; Microsoft's online products have more than 1 million paying customers; Zoho has more than 2 million registered users for its SaaS solutions.

But SaaS stays strongly rooted in Small and Medium sized businesses.

4) The coming days will see pitched battle between on-premise and SaaS vendors for market share.

SAP and Oracle lead in the multi-billion dollar CRM market with 22% and 16% of market share (2008 data). They are followed by Salesforce, a SaaS-based CRM vendor, with 10.6% of share. Microsoft, with both on-premises and SaaS CRM offerings ranks fourth with 6.4% share.

The gap seems to be closing in.

What do you think?

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