According to a recent IDC study, the acceptance of software as a service (SaaS) delivery models, which includes software on demand and hosted application management (hosted AM), continued gathering momentum and customer mindshare in 2005 which is expected to further increase in 2006. IDC believes that SaaS providers will pay particular attention to developing and increasing partnerships in order to expand revenue streams and customer adoption in the upcoming year.

IDC's top ten predictions for SaaS in 2006 are:

  • Large ISVs Will Spin Off On-Demand Versions of Products
  • Small and Medium Enterprises (SMEs) Remain a "Tough Nut to Crack"
  • Microsoft Strengthens SaaS Resolve
  • Software on Demand Providers Focus on Partnering
  • Mini-Ecosystems Emerge to Extend the Reach of Software on Demand
  • SaaS Enablers Continue to Aid Availability of On-Demand Offerings
  • Merger and Acquisition Activity Continues
  • SaaS Providers Concentrate on Improving Offerings and Customer Experience
  • Hosted AM Becomes a Stepping Stone Toward On-Demand Delivery
  • SaaS Will Help Drive a Software Industry Transition to Subscription Licensing

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