Forrester forecasts the future of software-as-a-service

The latest installment of Forrester's TechRadar series reports that, while SaaS started out in CRM and human capital management (HCM) applications, the market is starting to gain traction in areas such as web conferencing, collaboration and IT services management.

"SaaS applications have advanced beyond early market applications in human resources and CRM to become a game changer in the enterprise software market," said Liz Herbert, senior analyst at Forrester Research.

"SaaS adoption continues to increase, and it is now relevant for a wide array of applications."

According to Forrester, SaaS collaboration is set to be one of the hotter areas of adoption, with the potential to significantly impact the collaboration market, although the report does warn that its long-term future is unknown.

Web conferencing, on the other hand, which is already heavily SaaS-based and a comfortable technology delivered over the model, will continue to grow, particularly in the current economic climate in which travel budgets are being greatly reduced.

CRM, one of the founding SaaS applications, is rapidly reaching maturity, but is still being shunned by some organisations that insist on using their internal systems.

Similarly, the HR and HCM space has proved a popular and compatible market for SaaS. The majority of applications have been niche solutions from small vendors, but Forrester believes that this will change as some consolidation occurs.

IT services management is another sector expected to move increasingly to a SaaS delivery model, and has the potential to transform the world of IT applications as adoption picks up.

For small and medium sized enterprises, online backup is proving a popular option as it offers an affordable way to meet growing regulation, and provides peace of mind with secure, remote backup of critical data. Widespread adoption is being hindered by concerns over the large-scale recovery of data, however, and there are control and security issues.

Forrester warned that SaaS is not ideal for every situation. The realm of business intelligence, for example, is seeing some trials on a SaaS model, but the large volumes of data, and a reliance on real-time reporting, can be hindered by the network infrastructure and delayed response times.

The report concludes that, as the technology begins to mature and adoption becomes widespread, some integration of these separate technologies will occur. But firms should not expect any magic integration solutions to suddenly appear.