A brief history of SaaS trends in the enterprise

Despite all the talk about Software as a Service (SaaS) in recent years, the idea of it in IT isn’t new.

Despite all the talk about Software as a Service (SaaS) in recent years, the idea of it in IT isn’t new. IBM was offering its customers time-sharing on its mainframes almost 50 years ago. But the SaaS of today has taken on its own look, with enterprise applications accessed through a Web browser and payments made by use or through an annual or monthly fee.

The expansion of the Internet also brought risk — or at least perceived risk. Companies became more wary of placing their private data on a network that anyone could possibly hack into. Joshua Greenbaum, a principal consultant at Enterprise Applications Consulting in Berkeley, Calif., thinks that concern should have gone away by now.

“There really was an inflection point almost two years ago in the United States where the question of cloud security was taken off the table, except for the most regulated industries,” he said. Yet surveys show that security is still an issue for many IT shops. In recent SearchOracle.com and SearchSAP.com surveys, about a quarter say security and compliance issues are preventing them from moving to the cloud.

When Salesforce.com was founded in 1999 and began to grow, the idea of SaaS grew with it. Now the company has almost $1.7 billion in annual revenue and is the biggest player in the field of SaaS CRM, which account for almost a third of all SaaS revenue, according to Gartner Inc., a consultancy in Stamford, Conn.

Meanwhile, other major IT vendors, such as Oracle and SAP, are pushing the SaaS message. Oracle recently made its long-awaited Fusion Applications available and is encouraging customers to host them in Oracle’s own data center. It also has made strategic acquisitions such as CRM SaaS provider RightNow to boost its SaaS portfolio. Similarly, SAP has released updates to SAP Business ByDesign and acquired SuccessFactors while continuing to grow its OnDemand products, an effort to convince its customers to host enterprise business applications in the cloud.

This was first published in February 2012

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