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"When you don't have the resources to build out an elaborate and bleeding-edge backup strategy, this is a great alternative. It's affordable, it's safe, it's trustworthy and, most importantly, it works."

Lauren Whitehouse,
Analyst, Enterprise Strategy Group

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.