Partnering activity and system maturity boost delivery model

The acceptance of software as a service (SaaS) delivery models, which include software on demand and hosted application management, will gather momentum this year, industry analysts predicted today.

According to a newly published IDC study, SaaS providers will pay particular attention to developing and increasing partnerships in order to expand revenue streams and customer adoption over the next 12 months.

"The role of SaaS delivery in the software industry continues to grow. Traditional software players have recognised the importance of SaaS and numerous SaaS-focused companies are entering the marketplace," said Erin Traudt, research analyst for IDC's SaaS programme.

"IDC believes that these types of disruptive business models will ripple through a variety of software markets in 2006.

"Current SaaS adoption is just the tip of the iceberg, leaving plenty of opportunity for providers and partners. Customer demand will play an integral role in fueling the development of SaaS solutions and ecosystems."

The analyst firm's report, Top 10 Predictions for 2006: Software as a Service, predicts the following:

Large ISVs will spin off on-demand versions of products

Small and medium enterprises remain a 'tough nut to crack'

Microsoft will strengthen its SaaS resolve

Software on demand providers will focus on partnering

Mini-ecosystems will emerge to extend the reach of software on demand

SaaS enablers will continue to aid availability of on-demand offerings

Merger and acquisition activity will continue

SaaS providers will concentrate on improving offerings and customer experience

Hosted application management will become a stepping stone towards on-demand delivery

SaaS will help drive a software industry transition to subscription licensing