Despite the wave of consolidation sweeping the industry, buyers have actually gained more leverage than ever when it comes to making deals with their vendors, notes a PricewaterhouseCoopers analysis. “Software buyers need to realize that the pendulum is beginning to swing in their favor and that there are an increasing number of alternatives in today’s software market,” concurs Gartner analyst William Snyder (no relation to this writer).
There are a lot of reasons for the swing, but one certainly stands out: The shift to SaaS (software as a service). The poster child for this phenomenon is Salesforce.com. "Both its development and delivery models are having a disruptive effect on the entire CRM market,” notes Forrester Research analyst Bill Band. But it’s not just Salesforce: By 2011, Snyder says, fully 25 percent of all new business software will be delivered as a service as Salesforce and other vendors push upstream from the small-business market. Already, SaaS providers make up the majority of sales for several segments of human resources applications, and is well-established for supply-chain management.
