Gartner's 4th prediction..
By 2012, at least one-third of business application software spending will be as service subscription instead of as product license. With software as service (SaaS), the user organisation pays for software services in proportion to use. This is fundamentally different from the fixed-price perpetual license of the traditional on-premises technology. Endorsed and promoted by all leading business applications vendors (Oracle, SAP, Microsoft) and many Web technology leaders (Google, Amazon), the SaaS model of deployment and distribution of software services will enjoy steady growth in mainstream use during the next five years.
While I believe that this prediction represents on "pendulum" item - 1/3 of business application spending for service subscriptions vs license is reasonable. The trend greatly increases financial flexibility and for those buyers who require limited flexibility in the configuration of an application it could be an ideal way to add capability or increase efficiency.
This change will create another challenge for I.T. as we add capabilities including governance to manage these arrangements. It is an opportunity for us to grow a certain segment of our staff and to improve services to the business and potentially to our customers.
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