McKinsey & Company published a report predicting the market size for Software as a Service (SaaS) will exceed $37B market over the next 5 years. In particular, the report described the need for Independent Software Vendors to SaaS-enable their products using special-purpose SaaS development tools. Matt Asay also wrote recently that the growth of the top 60 software companies is driven by SaaS.
McKinsey claims that traditional J2EE and .NET platforms are poorly suited to building SaaS applications. According to McKinsey, this opens up a $3B market for Platform as a Service (PaaS) products from new entrants like WaveMaker, Coghead and SalesForce. From the article:
Although SaaS development platforms like SalesForce and Coghead have gotten a lot of attention, this market has so far been remarkably closed and proprietary. The Platform as a Service leader, SalesForce, has both a draconian hosting policy (host your apps and data anywhere, as long as it’s with us!) but also a proprietary language (who needs Java when you’ve got Apex!?).
Moving forward, the same trends driving open source adoption everywhere else in the industry will ultimately drive SaaS adoption of open source, particularly by ISVs whose business plan does not include a low multiple sale to their proprietary hosting provider. Future SaaS platforms will converge with traditional tools, offering on-demand development based on traditional programming languages with built-in tools for mash-up based development for basic users.
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