SaaS Providers Upcoming Trends for 2016

3 minutes

In a recent study, International Data Corporation (IDC) predicted that cloud software would be a nearly $70 billion industry worldwide in 2015.

IDC’s study, published in July 2015 and entitled “Cloud Computing: The Essential Foundation of Industry Digital Transformation — Worldwide and U.S. Cloud Forecast by Vertical, 2015–2019,” found that “The major opportunities for cloud within verticals come from the development of intelligent industry solutions…that includes cloud as well as big data and analytics, mobile, and social…IT suppliers that showcase the long-term benefits and the true value of the cloud…(e.g., efficiency gains in business processes and improvement in customer acquisition/customer experience) will be most successful.”

Given such expectations, what do SaaS providers need to know about upcoming trends for 2016? Based on the forecasts of experts from Forbes, IT Briefcase, and others, here are a few important SaaS predictions to keep an eye on.

  • SaaS Software Revenues Up. This first trend is just plain good news: the SaaS pie will get bigger in 2016. Analysts expect SaaS revenues to reach $106 billion in 2016, which is an increase of 21% over 2015 levels . A Goldman Sachs study from 2015 projects that cloud spending on infrastructure and platforms will reach 30% CAGR from 2013-2018, compared to 5% for IT generally. Get ready for a big year, and potentially a lot of new players in the field eager to get in on the action.
  • Security in the Cloud. Scott Tyson, Director of Email Security at Mailprotector, notes in ITProPortal that by the end of 2015, the cloud will host or SaaS will provide 15% of cyber security. That percentage increases to more than 33% by the end of 2018. That’s an increase of more than 50% and a big slice of the pie by anyone’s standards.
  • Encryption Technology. Also according to Tyson, encryption technology will feature more significantly in SaaS’ securing data in 2016.
  • Passwords Passé. Taylor Armerding of CSO writes that passwords will give way to quicker (and often more secure) authentication methods such as biometrics, geolocation, Bluetooth, and pictographs.
  • ITaaS. Cloud services are changing the way businesses operate. IT departments will move from in-house corporate departments to those provided “as a service” . This will not only include providing security for the data of various sized companies, but also disaster recovery services in the cloud. Many companies cannot, or simply would rather not, invest the capital it takes to provide the level of security that an outside service can provide.
  • DCaaS. Data Centers will also move to cloud-based systems in 2016. Cloud providers with a strong IT-security focus will handle securing the data centerpieces that have not already moved to SaaS.
  • Disaster Recovery. Expect to see Disaster Recovery in the cloud as a top outsourcing factor in 2016 . Companies have recognized the amount of time, talent, money, and expertise that cyber security and disaster recovery require, and more will opt to outsource the critical disaster recovery function to SaaS in 2016.
  • Hacker Heaven. It’s not all good news for cloud providers, however: hackers will focus on SaaS sites, which are “always on.” Those sites become rich targets for intrusion. Hackers will use SaaS site credentials as major attack points. Even in the cloud, environments used as backup or recovery are often less secure than production environments. That perceived insecurity might mean that corporations and the cloud must treat backup and other recovery data with the same security level as that used to protect production sites.

The new year promises to be a good one for SaaS providers, as more and more businesses realize the advantages of outsourcing important functions like disaster recovery and security. While 2016 will not be without challenges, we’re looking forward to seeing the field grow and innovate to meet increased demand.

Avangate powers modern Digital Commerce, solving the complexity of online commercesubscription billing, and global payments for SoftwareSaaS and Online Services companies. Backed by a proven cloud platform, unmatched expertise and a depth of digital commerce services, Avangate helps digital business leaders drive the fastest path to revenue, maximize the value of every customer, and expand global reach. Contact us for more information about how our digital commerce services can help you grow your business.

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