I recently came across this Forbes article in the June issue by Sramana Mitra detailing some of the expected M&A activity in the SaaS space, including Citrix Systems, SuccessFactors, and NetSuite as possible targets. With many of these venture-funded businesses seeing their funding drying up, I imagine plenty of these companies will get acquired.
On-premise vendors will look to expand their product portfolio or enter the SaaS market entirely via an acquisition while others, such as the IBMs of the world, will look to enter the application side of the market via a purchase.
But now that the SaaS market has achieved widespread market penetration and the idea of cloud computing has become popularized in the business world, the discussion in 2009 has begun to shift to why organizations should adapt SaaS/cloud computing and how to do so effectively. In other words, cloud computing is going through the same hype cycle – to quote Gartner – that every technology inevitably experiences.
Along the same lines of Martin’s recent comments on SaaS, businesses have discovered there’s a big difference between what vendors guarantee and what the software actually delivers. A year or two ago, the concept of hybrid, on-demand and on-site deployments, along with private clouds, was irrelevant. That’s changed in the past 12 months thanks largely to the kickback from customers, as businesses have discovered that letting your vendor host everything doesn’t provide an answer to anything and everything.
So back to all the M&A, I agree with Mitra when she states that we’ll see a shakedown in the market through this year and into next, the benefits of which will be fruitful, but short-lived as the buzz, definition, and expectations around cloud computing and SaaS also shakedown over the coming year as well.