Software-as-a-service (SaaS), cloud, IT consumerisation and mobile are expected to impact the software industry in the coming days, according to a report by PwC.
PwC’s Global 100 Software Leaders report found that SaaS now accounts for at least 40% of the software revenue for 10 major companies listed Global 100 and out of them nine companies are based in US.
PwC US software and Internet leader Patrick Pugh said that software companies and vendors are especially beginning to feel the effects of the software-as-a-service (SaaS) technology on their business models.
"Vendors need to continually evaluate both the changing priorities of customers and the industry because these evolving sentiments are causing deep structural changes and fundamentally shaping business models," Pugh said.
In 2011, SaaS accounted for 4.9% of the total software revenue and its share is expected to grow with half of 800 North American companies are planning for cloud based solutions for buying software.
According to the report, perpetual license revenue has been witnessing contraction since 2004 while subscription revenue (including SaaS) is expected to grow 17.5% per year, accounting 24% of the total software revenue by 2016.
With SaaS model gaining traction, software companies are now evaluating their business models, including delivery methods, pricing strategies and sales compensation options, the report added.
"To drive future growth, North American software vendors must prioritise transforming their business models to address the realities of the SaaS environment and incorporate social enterprise, IT consideration and data analytics," Pugh added.
"Furthermore, U.S companies can find new opportunities to expand globally by tailoring their software to specific vertical markets and geographic regions."
With the growing importance of the SaaS model, acquisitions will viewed as an R&D strategy to rope in talent and build SaaS capabilities more effectively and efficiently.
The report also added that with growing adoption of cloud services, mobile devices and low-cost apps, the CIOs will no longer be the sole decision makers while purchasing software.
