What is exactly the difference between software-as-a-service (SaaS) and a cloud application? If you aren’t confronted with both topics frequently, this question is likely to be confusing and you may be tempted to simply answer that there is no difference. In fact, the difference is subtle and is based on the fact that SaaS is a subsystem of cloud computing that represents the application layer of the cloud. Down the road, this differentiation may not matter anymore as SaaS has matured over the past few years and SaaS services could be considered as cloud services in the not too distant future, at least if we believe Gartner’s projections.
Gartner estimates that 75% of the current SaaS delivery revenue could be considered as a cloud service, and that could exceed 90% by 2014 as the SaaS model matures and converges with cloud services models. However, SaaS is on a dramatic growth pace that is estimated to climb past $8.5 billion in sales in the global enterprise application software market this year. That would represent a 14.1% growth rate over $7.5 billion in 2009. SaaS currently holds a 10% share of the total enterprise software market and is believed to increase that number to 16% by 2014, although it may be generally described as cloud service by then. Gartner expects the “adoption of SaaS to far outpace market growth through 2014.”
Security is without doubt the greatest concern of businesses when they consider a move to the SaaS and the cloud, but it appears that more knowledge about these technologies is impacting their perception in a positive way. “The popularity of SaaS has increased significantly within the past five years and initial concerns about security, response time, and service availability have diminished for many organizations as SaaS business and computing models have matured and adoption has become more widespread,” Gartner said.
However, the adoption of SaaS is different in different markets. The company said that the project and portfolio management (PPM) SaaS market is rapidly growing in percentage of sales. The communications and collaboration (CCC) market continues to show the widest disparity of SaaS revenue generation, with SaaS representing 4% of enterprise content management (ECM) and approximately 82% of Web conferencing in 2009. SaaS is currently responsible for 24% of total CRM market revenue in 2009.