IDC Says the Downturn is Good for SaaS

And I agree with them - it sure matches what we are seeing here at Intacct.

IDC Says:

The harsh economic climate will actually accelerate the growth prospects for the software as a service (SaaS) model as vendors position offerings as right-sized, zero-CAPEX alternatives to on-premise applications. Buyers will opt for easy-to-use subscription services which meter current use, not future capacity, and vendors and partners will look for new products and recurring revenue streams.

One of the main value drives for SaaS has always been that you don't need to make a large up front investment in software, and you don't have to make any infrastructure capital investment at all. In the downturn we're seeing the need to preserve cash accelerate the adoption of Intacct by companies who need to move to new versions of products like the Sage and Microsoft Dynamics and Deltek lines - all of these moves require capital expenditures for new software, new servers, new databases, sharepoint, etc.

The same downturn-driven need for cost savings and cash preservation is also driving companies to switch over from Oracle Financials to Intacct - the entire subscription cost of Intacct is about 50% of just the software maintenance charges alone for Oracle Financials - not even counting the capital and operating costs that go along Oracle.

Additional findings from the IDC study include:

• By the end of 2009, 76% of U.S. organizations will use at least one SaaS-delivered application for business use.

• The percentage of U.S. firms which plan to spend at least 25% of their IT budgets on SaaS applications will increase from 23% in 2008 to nearly 45% in 2010.

• This market's growth prospects will accelerate the shift to SaaS for the whole value chain as the promise of a recurring revenue stream, and the opportunity to tap OPEX and project-related dollars, will benefit the whole SaaS ecosystem.

At our user conference I polled our the audience and our average client is already closer to five SaaS applications - they are seeing extraordinary savings in their overall IT expenditures and great improvements in productivity as they shift more and more of their business to the cloud.

We similarly are seeing a major shift in the the channel - with the VAR community actively moving to embrace SaaS. Since the channel follows demand - it rarely creates it - the projection that demand for SaaS will continue to rise implies we will see great synergy, since SaaS is better for both the client and the channel.

Lots of the SaaS bloggers are covering the new IDC report - Vinnie, Phil and Dennis among them.