Global SaaS Market 2014 – 2018 – Continues to drive growth in Cloud Computing Market

Global Software as Service market is expected US$53 billion by 2018, or 59 per cent of the enterprise public cloud computing market from the current 2013 revenues of US$23.2 billion, according to Juniper Research and also expects the overall enterprise cloud computing market to reach US$90.7 billion by 2018. According to Forrester Research, the total public cloud services market revenues were US$58 billion in 2013, is expected to grow to $72 billion in 2014 and expected to reach US$191 billion by 2020. Software as a Service (SaaS) solutions accounted for $36 billion in revenue in 2013. SaaS market has reached significant maturity levels and well established in several application categories like sales force automation, customer relationship management, human resource management, eProcurement and ePurchasing, replacement of existing licensed software. Cloud platforms, led by Amazon Web Services LLC, with revenues of $4.7 billion in 2013 but traditional IT partners IBM, HP and Microsoft are fast catching up with their own set of offerings and market is becoming highly competitive. The other two segments of cloud computing Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) are also expected to continue growth. But these two segments face certain critical issues in terms of data security, compliance and portability. “Both PaaS and IaaS will experience significant growth over the forecast period as new applications, developed specifically for the cloud to harness workloads such as big data analysis, benefit from the PaaS ‘fast-track’ model,” Juniper says.

According to San Diego-based investment firm Software Equity Group, SaaS software revenues will contribute around 25% of the overall software market in the next five years. Research firm Gartner estimated that global spending on SaaS will reach $22.1 billion by 2015. Some software vendors are converting their software delivery and revenue models to SaaS, while others acquire SaaS companies to gain access to this market. SaaS offerings are predominantly based on subscription models where enterprise customers access the software in the cloud by paying monthly subscriptions which is totally different from the traditional software license and maintenance models where customers have to pay large upfront perpetual license fee. With the emergence and development of networking equipment, platforms and access devices like smartphones and handheld devices, SaaS based on subscription model is picking up and customers can easily access data and applications form anywhere, at any time, on any device. Despite this there are certain concerns for CIOs who are not totally adopting the SaaS model as there are security concerns, switching costs, regulatory concerns and also cloud outages and failures too. Adoption of cloud based models is further expected to grow in the next five years as the technologies mature and more applications and services are offered on the cloud. Companies too need to rethink their IT investment strategy as Cloud Computing offers a significant level of cost savings in terms of IT infrastructure investments.

Global Platform as a Service (PaaS) Market 2013 & forecast 2018 market growing

PaaS provides a cloud computing platform and a solution stack that allows developers to create applications and software and test them by utilizing tools and libraries from the cloud services provider. Compared to Software as a Service (SaaS) and Infrastructure as a Service (IaaS), PaaS market is small and slowly picking up and the reason being complexity in adaption and building a standardized PaaS platform from the scratch is very difficult for organizations. According to Markets and Markets, Global Platform-as-a-Service market is estimated to grow from $1.28 billion in 2013 to $6.94 billion in 2018 at a compound annual growth rate (CAGR) of 32.54% in this period. In terms of geographies, North America continues to be the biggest market for PaaS solutions. Worldwide platform as a service (PaaS) revenue is on pace to reach $1.2 billion in 2012, up from $900 million in 2011, according to Gartner, Inc. The market will experience consistent growth with worldwide PaaS revenue totaling 1.5 billion in 2013, and growing to $2.9 billion in 2016.

Along with the large players like Amazon, Google, IBM, etc., small players also emerged in this segment that made the market more competitive and vibrant with new products and services are being offered by the cloud services providers. The need for the businesses to develop new applications, tools and technologies at a low cost have increased the demand for the developers and also for PaaS offerings as most of the developers are looking to PaaS to develop and test new apps and software. Application Development and Maintenance PaaS (ADM PaaS), Business Process Management PaaS (BPM PaaS), Application PaaS (aPaaS), Integration PaaS (iPaaS) and Other PaaS are the segments categorized based on Applications.

According to Gartner, the largest segments within the PaaS market are cloud application platform services (aPaaS), accounting for 34.4 percent of total PaaS spending in 2012; cloud application life cycle management (ALM) services (almPaaS) at 12 percent; cloud BPM platform services (bpmPaaS) at 11.6 percent; and cloud integration services (iPaaS) at 11.4 percent. Gartner predicts that the potential spending in PaaS technologies is an average of $360 million per year from 2011 through 2016.  "The fundamental appeal of PaaS is the opportunity for ISVs (independent software vendors) and IT organizations to create new software solutions with minimal capital expense and without the hassle of provisioning and configuring the underlying infrastructure," said Yefim Natis, distinguished analyst at Gartner. "Too many SMBs (small or midsize businesses), in addition, PaaS offers the chance to take advantage of some state of the art enabling technologies, they otherwise could not afford. Finally, the popularity of SaaS also drives adoption of PaaS for customization, extension and integration of the cloud-based applications."

IDC expects 2013 will see an explosion in industry PaaS (public platform as a service) offerings as the market moves up the software stack and "horizontal" PaaS becomes commoditized by platforms built on open source-based infrastructure. In industry PaaS, cloud-based shared services environments are being tailored to the needs of a specific industry, while additional industry-focused solution developers are developing and deploying a range of industry-targeted value-added solutions and services on these platforms. Examples of emerging industry PaaS include: NYSE Capital Markets Community Platform in financial services; numerous health information exchanges in healthcare; and Johnson Controls' Panoptix App Marketplace in smart energy. (Source: IDC predictions 2013: competing on 3^rd Platform) 

Global SaaS, PaaS, IaaS and BPaaS Market 2011 and Forecast

Cloud computing includes Software as a Service (SaaS), Platform as a Service (PaaS), Infrastructure as a Service (IaaS) and Business Process as a Service (BPaaS). SaaS is the highest level of the cloud and includes actual cloud applications. SaaS segment is the largest segment in the overall Cloud Computing Market. Customer relationship management (CRM), Content, communications and collaboration (CCC) market and Enterprise resource planning (ERP) revenue are the key sub segments respectively. North America, followed by Europe is the key markets for SaaS. Asia Pacific and Latin America are key growth markets too. Adoption is being driven by availability of on demand software, understanding of the model, increasing interest and pressure on IT managers to reduce costs. Data security concerns, outages, lack of understanding of the cloud and infrastructure, and integration with existing infrastructure are concerns. According to Gartner SaaS market is expected to reach $ 21.5 billion in 2015 from $12.1 billion in 2011. IDC estimates it to reach $ 40.5billion in 2014 from $ 21.8 billion in 2011 and Forrester estimates it to reach $78.4 billion from $21.2 billion in 2011. Google, Citrix, Salesforce.com, NetSuite are key players.

PaaS is the middle level and builds upon the IaaS layer and provides an application development platform for the cloud. Gartner says, PaaS products primarily supported application server capability, but the market has expanded to other middleware capabilities as a service, such as integration, process management, and portal and managed file transfers (MFTs). Gartner analysts said PaaS offerings are likely to expand the application integration and middleware (AIM) market by bringing in a new range of organizations that otherwise would have been packaged application and office software users. Vendors in this space include Windows Azure, Heroku and SalesForce’s Force.com. Salesforce.com has the most mature PaaS. According to Gartner PaaS market is expected to reach $ 1.8 billion in 2015 from $707.4 million in 2011. Forester estimates it to reach $9.8 billion in 2015 from $820 million in 2011.

IaaS is the lowest level of the cloud technology stack. It provides operating system support, storage and processing. Vendors in this sector include Google App Engine and of course Amazon’s (news,site) latest whipping boy AWS EC2. Infrastructure-as-a-service (IaaS) will shift from public clouds to virtual private clouds, Forrester Research projects. While adoption remains high, the size of the market will shrink and public cloud services will cost less in the future because the cost of inputs will continue to decline. According to Gartner IaaS market is expected to reach $ 22 billion in 2015 from $5.6 billion in 2011. IDC estimates it to reach $ 15 billion in 2014 from $ 3.4 billion in 2011 and Forrester estimates it to reach $78.4 billion from $21.2 billion in 2011.

BPaaS is even higher up than SaaS and it includes technology, people, process and smart analytics wrapped in a simple "pay-as-you-go" commercial model. It allows companies to minimize or eliminate substantial upfront costs.  BPO outsourcing providers such as India, China and Latin America will likely make a play in this area. Traditional BPO providers are setting up data centers to offer cloud computing services to their clients and Cloud computing inclusive of BPaaS provides a big opportunity for service providers. According to Gartner BPaaS market is expected to reach $ 133.5 billion in 2015 from $71.7 billion in 2011. Forester estimates it to reach $3 billion in 2015 from $530 million in 2011.