Sunday - Apr 23, 2017

The Software as a Service market in 2014


The Software as a Service market in 2014

In recent years, the SaaS (Software as a service) market has increased its turnaround: in 2012 the total industry income was around $14.5 billion and in 2014 it is expected to reach $17 billion. This market could grow at a rate of 20% through to at least 2020, three times as fast as the software industry.[1]

SaaS applications are used mostly by large and multinational company, but also by SME (small – medium enterprises). Due to a wide range of applications that goes from marketing to human resources and from IT to finance, they are purchased by companies with a high level of automation and innovation. Because of the legislative obligations, financial institutions like banks, insurance companies, brokers and agents must comply are the ones that probably use the SaaS apps, since they need to provide regular reports on their clients and transactions to the relevant authorities.

The companies that are dominating this industry are the “software industry titans” such as Intuit, Oracle, Salesforce, Adobe, Microsoft, Google, and SAP.

Which SaaS solutions are the most used or most popular?

The most used or most popular SaaS solutions are built around the customer. This means that any application like CRM ( customer relationship management) or e-mail marketing software are used to manage the clients, their information, marketing and sales.

In order to manage financial transactions, companies are also using billing and invoicing software or accounting software that help manage their financial and treasure department.

Other popular may involve the human resources management (HRM), that helps the HR department to track hours, automate the payroll or hire more efficiently or the enterprise resource planning (ERP), that improves process efficiency.

Some SaaS applications are used also by small businesses like e-commerce, photography studios, law offices, real estate agencies, or professional studios. They are also created to specific industries that require certain processes due to strict legislative rules, such as the public administration.

Security for businesses

Since all of these types of software carry personal information of clients, employees, directors, and providers, and are used to process even financial operations, protecting all of this information, details, and transactions becomes crucial.

In order to understand how important it is, you should think about what happened to MasterCard in 2005. The famous credit card company announced that there was a real risk that up to 40 million credit card holders might have had their data stolen. This was caused by a mistake by the processor, Card System Solutions, who had improperly stored the card data without encrypting them because they were trying to do some research on the transactions. At the same time, a Trojan horse was able to breach the MasterCard security system and steal 200,000 card holders’ data.

There could be many examples like this one and these continuous cyber-attacks pushed the companies to increase their security systems, by implementing security-aware design techniques and by using measures like intrusion detecting systems, one type pad encryptions and more sophisticated techniques.

However, if the security systems are continuously improving, the threat landscape is also continuously evolving. The implementation of SaaS and cloud applications needs homogeneous solutions in order to deliver infrastructure and services in a cost-effective manner: this unfortunately is making the job easier from the attacker’s point of view, since he could focus on a smaller range of software. If the SaaS designers are not able to update continuously the software security system, hackers could access to the company information and resources.

The trend of the market and the rationale in Google’s referral program

In order to become even larger, the SaaS market is not limited to software, but is also involved in web apps, the so-called cloud applications. In fact, it could be considered as a natural extension of e-commerce services, since the same applications are moving from physical to web-based support. This will also involve a higher level of security on the cloud applications.

There are companies that are moving towards this trend and are investing a significant amount of money into cloud applications, and one of them is Google. Google developed its web-based apps such as Google Drive, Gmail, Calendar, Docs, Sheets, and Slides. In fact, you can use programs such as Outlook or other e-mail providers, or the same applications provided by Microsoft Office online. You can share them in real time with your clients, friends, or family who maybe live overseas or a long way from you.

Google is betting on its web-based apps and for this reason created the Google apps referral program: for every user you refer who joins Google Drive, you get $15. From a referral point of view, this campaign is aggressive, since their main aim is to “recruit” students to use them instead of Microsoft Office 365. They could become the next source of business apps sales.

Google states that this program has been created to show their appreciation to the people sharing their apps with their networks by compensating them for this effort. By widening its users number, Google should also sell more business applications to new-users and increase their market share. The Californian company is betting on this referral program to “steal” the potential Microsoft Office clients by paying them to use their web- based applications for free, hoping that in the future they will buy the busisness solutions.

If the SaaS market is moving from “physical” software to web-based applications, there are companies such Google who are trying to benefit from it. After having developed many apps, it is actually trying to fight a battle against solid and physical software or applications such as Microsoft Office 365. Who will win? It is difficult to make a proper prediction, but over the next few years we will get an answer.

[1] http://blog.startupcompass.co/2014-saas-market-outlook

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