By 2014, approximately 34% of all new business software purchases will go toward software as a service (SaaS), according to a new IDC study. This increase in cloud-based software will correspond with a $7 billion decline in licensing revenue, which could forever change the way software licensing is handled. What does all of this mean for a business? The upside to SaaS is the ease of deployment, particularly for large organizations. Software updates are performed in the cloud with little or no effort on the part of IT staff, and the necessity to keep the latest hardware and operating system may become a thing of the past, as more software is delivered using web applications. This translates to savings both for the software vendor and the customer. The possible negative repercussion is a decrease in the amount of control a company has over its software. For some this may not be an issue at all. Others may opt for private cloud hosting or running their own applications on cloud service providers' servers. Microsoft Windows Azure cloud platform, for example, will allow applications to be hosted and run on their data centers and will include support for Microsoft Business Applications. Microsoft Dynamics GP customers may elect to move specific applications, such as expense report processing, to the cloud while maintaining their ERP on-premise software. This includes Microsoft Dynamics CRM and Microsoft Dynamics GP integration.
As SaaS continues to take more of a center stage in the business software world, companies should prepare their employees for the transition and adjust their financial and IT planning to function within new business and technology models.