![]() So far, SaaS has taken over only a few categories of software (customer relationship management, online collaboration) though we expect it to penetrate almost all software categories over the next few years (see Figure 1). We hear three questions time and again: How big is this disruption? How will it change the rules of the software game? What can incumbents do to thrive and avoid being eclipsed by upstarts? For software, which for years has been a profitable and high-growth sector, the central debate is around whether SaaS will reduce or expand revenue and profit opportunities. Inflections of this magnitude are rarely kind to incumbents, although the giants sometimes learn from newcomers how to survive and even thrive. Venture behind the headlines, as we do when we talk with software CEOs and industry veterans, though, and questions emerge regarding whether SaaS is good for the industry in the long run. Just about every software company watching this shift is realizing it has to play the SaaS game. In 2011, they were five times more likely to receive venture capital investments than traditional software companies. Revenue growth for SaaS companies is predicted to triple between 20. ![]() ![]() Software as a service (SaaS) has created exciting fast-growth companies with innovative business models and even a few stellar IPOs like that of human resource software provider Workday whose shares rose about 70% above the opening bid for its October 2012 debut. The cloud has reenergized the software sector.
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