SaaS explosion will bring security challenges

As hosted apps become more common, integration and security issues will arise, firm says

Use of software-as-a-service has more than doubled since the beginning of 2006 and will double again by the end of the decade, creating challenges for customers and vendors as they attempt to integrate hosted offerings with on-premise software.

That’s the conclusion of research recently released by Saugatuck Technology, a consulting firm focused on emerging IT markets.

As companies increasingly use SaaS (software-as-a-service) products for mission-critical applications, integration with in-house software will likely require service-oriented architectures (SOAs), the report states.

“SaaS is going to complicate and hybridise user IT and business operational environments faster, and to a greater degree, than most user and vendor executives understand at this point,” the report states.

“The vast majority of user IT departments will simply not have the resources to handle the influx of enterprise-level SaaS [expected to occur over the next seven years].”

Saugatuck’s research paper, titled Three Waves of Change: SaaS Beyond the Tipping-Point, is based on surveys of 250 business and IT users, briefings with more than 30 SaaS vendors and extensive interviews with senior executives at 15 companies that use SaaS.

Saugatuck divides the software-as-a-service adoption trend into three “waves”. The first wave of early adoption was characterised by cost-effective software delivery involving stand-alone applications. The current phase of mainstream adoption is characterised by the growth of business solutions that are being integrated with on-premise applications.

Saugatuck predicts there will be a third wave of ubiquitous adoption that will begin next year and will involve “workflow-enabled business transformation, optimised business and IT ecosystems, inter-enterprise collaboration, maturation of the IT utility and of SaaS infrastructure providers.”

More than a quarter of companies are using at least one software-as-a-service application — up from 11% at the beginning of 2006, the report states. By the end of this year Saugatuck predicts SaaS adoption will grow to 47% and by 2010 it will reach at least 65% worldwide.

“Much of this growth is coming without any sort of plan or management structure,” report lead author Mark Koenig is quoted as saying in a press release accompanying the report.

The average number of SaaS applications used by medium-sized and large enterprises will reach seven per company by 2010, more than double the current amount, the firm also predicts.

“Everyone thinks SaaS is a [small to mid-size business] phenomenon,” says William McNee, report co-author and president and CEO of Saugatuck. “While that is true, it is crossing all kinds of customers.”

The trend towards SaaS applications being tightly integrated with business services behind the firewall will necessitate a change in how IT departments view application security, and will lead them to consider “security-as-a-service” vendors, McNee says. “This is where the security perimeter needs to be extended beyond what is currently managed today, to incorporate new types of applications and services and solutions."

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