10Gtek: Cloud, SaaS and Mobile Are Changing Software Industry
The software industry is undergoing major changes by trends such as cloud, software-as-a-service (SaaS), mobile technology and the “consumerization of IT”.
According to Global 100 Software Leaders report from PricewaterhouseCoopers LLP, SaaS, mobile, and cloud forces and trends are influencing the IT industry. Software companies and vendors are especially beginning to feel the effects of the SaaS technology on their business models. Vendors need to continually evaluate both the changing priorities of customers and the industry because these evolving sentiments are causing deep structural changes and fundamentally shaping business models.
According to the report, approximately 40% of the turnover of 10 of the top 100 software companies globally is generated by the SaaS service, in which nine of the top 10 are US-based. While US companies lead revenue share of SaaS, PwC finds that companies from emerging markets will increasingly challenge the dominance of the large North American vendors.
To drive future growth, North American software vendors must prioritize transforming their business models to address the realities of the SaaS environment and incorporate social enterprise, IT consumerization and data analytics. Furthermore, U.S companies can find new opportunities to expand globally by tailoring their software to specific vertical markets and geographic regions, says the report.
SaaS is now becoming an integral part of the supply of software vendors and has a progressive effect on the business model of operators. In 2011, the SaaS revenue component represented 4.9% of the sales volume, a percentage continues to grow given that PwC estimates that a large number of companies are gradually planning to buy cloud solutions.
The report says that the turnover of on-premises software is now experiencing a decline for almost ten years, while SaaS is estimated a growth of approximately 17% per year. This trend pushes analysts to believe that in 2016 the SaaS can represent 24% of worldwide software revenues. A recent report from research group Analysys Mason estimated that the global enterprise cloud-based services market will reach $31.9 billion in 2017 against $18.3 billion in 2012. Gartner research also predicted that 77% of companies plan to increase their spending on SaaS in the next two years.