If there’s one upside to the dire global economy over the last few years, it’s that there’s been a greater desire to save money and make better use of the existing resources (human and capital) by companies around the world.  And that business trend has led to greater adoption of software-as-a-service (SaaS) by businesses in the U.S. and around the world. The facts support this trend: Analyst firm Gartner estimated that virtual IT delivery was going to be about a $9.6 billion industry in 2010, quickly growing to $16 billion a few years in the future.

Virtualization and SaaS make sense from a number of perspectives – cost savings, efficiency and enabling companies to focus on their core business rather than the behind-the-scenes IT complexities. These benefits are easy to comprehend.  However, there are still factors that are preventing companies from taking that step into the brave new world of SaaS.

Gartner Research Director Sharon Mertz noted that concerns about data security, questions about scalability, apprehension about whether vendors will be around for the long-haul and existing investments in IT staff or capital for applications have given some companies pause about utilizing SaaS offerings. But as the industry matures, these concerns are becoming less valid.

Security, in particular, is one aspect where companies are finding that they can do better with a SaaS model than maintaining their own in-house operations. According to its biannual Managed Security Services and SaaS report in September 2010, Infonetics Research’s principal security analyst Jeff Wilson noted that:

“The big story in the managed security space continues to be SaaS. We forecast SaaS for security revenue to increase dramatically, at a compound annual growth rate of 31 percent from 2009 to 2014, the highest CAGR in this market by a mile. The time for SaaS has come, and the strong growth forecast is driven by a mix of increased demand (with a boost from the poor economy) and greatly increased availability from a wide variety of providers, including network providers, security specialist service providers, large content providers, and product manufacturers.”

The global demand for managed security services/SaaS from organizations of all sizes is a result of a number of trends, Infonetics noted, including the proliferation of security threats, complexity of current security solutions, and the widespread use of so many different devices, platforms and applications.

As companies grow more comfortable with SaaS offerings and see the benefits – from efficiency and cost savings to outsourced expertise – that they can deliver, there’s no doubt that we’ll see the wave of virtualization flow from North America, into Europe and across Asia.

Ed Peek
VP, Worldwide Sales