
WHAT IS ON-DEMAND
On demand software can be compared to a utility. Instead of building a power plant to provide electricity to your business, you purchase electricity as you need it from the electric company and it is delivered to you over a network. On-demand software works in a similar fashion. On-demand software is described as:
- Software as a Service (SaaS) or Cloud Computing
- Hosted software where the customer pays a quarterly or annual hosting fee, as opposed the upfront payment associated with a traditional software license
- "Pay as you go" operation expense versus a capital expenditure
- User access to the application is over the Internet
- Customizable solutions
- Management, support, software upgrades and hardware support are the responsibility of the on-demand software provider
On-demand software is the future of software. Already growing rapidly, we expect it to be the dominant software model within 10 years.
- IDC reports that it expects customer spend on-demand software to increase to $14.8 billion by 2011.1
- Gartner Group reports that on-demand software revenue in enterprise application software alone will grow 21% in 2007 to reach $11.5 billion by the end of 2011.2
- Two out of three businesses are either buying or considering buying software via the subscription model.3
- McKinsey reports that the proportion of CIOs considering adoption on-demand software applications in the coming year has gone from 38% a year to 61%.4
1 Erin TenWolde, Research Analyst, IDC. August 2007.
2 "SaaS Demand Set to Outpace Enterprise Application Software Market Growth." Gartner Group. August 2007.
3 "Businesses Get Serious About Software-as-a-Service." InformationWeek Research. Reported in InformationWeek, April 14, 2007.
4 Abhijit Dubey. McKinsey. Panel at the SIIA OnDemand Summit. San Jose. November 8, 2006.