Is Software Dead?

Last week Mark Benioff, the colorful and controversial CEO of SalesForce.com, gave a keynote speech at Software 2007, under the provocative title "Software is Dead."

Of course, Benioff, didn't actually mean software was dead, just the kind that wasn't provided across the Internet as a service, a la SalesForce.com and its many partners. 

Perhaps it's time to think about just what it is that the SaaS revolution is up to and offer a status report.

1. SaaS is certainly catching on as a valid method for acquiring and using software, not just in the SMB market (where some ISVs wish it would stay), but also in the large Enterprise market where it proves suitable for a number of applications, particularly those where fast implementation or complex software for just a few users can be realistically offered with SaaS, but not at all with traditional software offerings, implemented by the IT department behind the firewall.  SalesForce.com is perhaps one of the best examples of a SaaS application that has appeal to companies of every size and enjoyed great success.
2. Traditional software isn't going to go away.  Even the most optimistic projections for SaaS expect it to be 25-30% of the new  software market by 2010.  That means the we'll still have lots of existing (installed) software around and we'll still be installing lots of traditional software.  Expect some of that to be for critical applications where customers want more control, some to be the continuing use of existing (and successful) products, and some to be in product areas where no one has written a competitive SaaS offering (think smaller vertical niche markets dominated by a single successful player or two).
3. One tool is never the best answer to every problem.  That's like hammering in nails with a screwdriver because you forgot to buy a hammer.   I love SaaS for its flexibility, its ability to offer a solution now (or very soon), and its lower cost (mainly in administrative savings for implementing, running, and supporting the software), but I'm sure there will always be other "best answers" for some questions.
4. We love what we already have.  Look at all the IT shops, large and small, that still run very old software because it does the job.  In big companies that could mean 30 year old main frame code.  It's so important to big users that we're creating a whole new set of undergraduate and graduate colleage courses in the programming and management of these big systems because it's clear they're not going away.  In smaller companies it might mean custom code written for the company -- or just an Excel spreadsheet -- three editions old -- that does exactly what the company needs.  This doesn't mean the company is behind the times -- they may run these older applications right next to web application servers and business intelligence applications -- and access to newly acquired SaaS applications -- but rather that they are making choices about what serves them best.

SaaS is a great idea but it's just one way to acquire and use software.  I suspect that it will eventually be more than 30% of all software -- if it fulfills its promise and nothing better comes along.  But we'll keep looking, just in case the next best thing is already warming up.

Comments

[anonymous]

Is that the Total Addressable SaaS Market Worldwide?

How much is it in $$ value?

[hari]

Amy,
Totally agree with you. SAAS is just another delivery model. And yes, that delivery model may be better than the existing ones and adoption rates will speak for iself. Mainframes are still existing !!!!

[Semih]

Amy,

If it is just a delivery model then all the software that is out there should be SaaS compatible after a couple of tweaks.

This is a huge opportunity for all technology companies who would like to provide value added software or services to the classic software paradigm.

I will make this claim SaaS is the Internet of software...