The State of the SaaS market as reflected by SaaScon

As SaaScon heads toward its third instance, I find myself reflecting on the current state of the marketplace. Or, rather, on how each SaaScon has reflected the state of the marketplace. 

The first SaaScon occurred when the SaaS market was obsessed with evangelizing "the next big thing" in software - namely, SaaS. We (the conference) gathered together a bunch of important folks (like Jeff Kaplan, Amy Wohl and Phil Wainewright) and about 35 vendors, and talked an awful lot about "the SaaS model."

The big sense at the first SaaScon was that this emerging space *needed* a vendor-neutral conference that would serve as a gatherining place. It was difficult because we knew that the attendees were made up of end-users, ISVs and developers, but at the end of the day, we knew there was a need for a conference focused on all things SaaS.

The second SaaScon saw a lot of the same people come back, but it saw the size of the conference more than double. The mix of end-users, ISVs and developers still existed, but an interesting thing started to happen: Vendors looking for end-users no longer felt the need to "talk strategy," they wanted to talk deployment; ISVs looking to get "into the SaaS game" held their own (as a percentage of the audience), where I thought they would decrease. The overwhelming take-away from the second SaaScon was that the marketplace had firmly moved past talking about "why" SaaS and was now beginning to explore the "how" of SaaS. A lot of that exploration was still a lot of hand-waving, but at least it had begun.

This third SaaScon is already speaking volumes. First off, Computerworld has become the producer of the show. This, in and of itself, says something about the marketplace - as Computerworld's specialty when it comes to events is in attracting end-users around a topic. In other words, SaaScon is turning the corner from an early "vendor love fest" (vendors talking to vendors) to a second year "adolescent" (figuring out who we are) to a mature "conference" (a resource for end-users and a lead generation mechanism for vendors).

This move to maturity (which is already reflected in over 4 times the number of end-users being registered for this year's conference at 90 days out, as registered for last year's conference) reflects a few very important things:

1. SaaS is past the asking of "how" and into the doing of "how." This is reflected in the attendee base, in the speakers (Colorado Capital Bank, The Schumacher Group, Boeing), and in the topics being addressed. We've moved past "understanding services" and into "solving problems with services" (utility computing for business efficiency, SaaS for compliance, etc).

2. SaaS is being reclaimed by the IT department. This is an especially important point. Year two of SaaScon (last year) saw a lot of vendors decide that they need to be talking with "line of business" managers and NOT the IT department, as they thought that's how they would influence the purchasing decision.

What we're seeing in year three is a shift in who "owns" SaaS. IT departments everywhere are waking up to the nightmare scenario of not having "control" over SaaS applications being purchased by lines of business. As a result, and I think SaaScon is actually ahead of the vendor marketplace on this, 2008 will be the year that IT departments reclaim SaaS purchasing from the lines of business. And SaaScon will be there to reflect that.

3. There is a race on right now to get viable SaaS companies out through a perceived IPO window in the public markets. I think this will only speed up in 2008. Accordingly, we're going to see consolidation of the SaaS marketplace into the big 4-5 SaaS "platform" vendors at the top, a mid-tier of several hundred "focused" SaaS providers, and an ecosystem of "niche providers" (SaaS compliance for the oil and gas industry, for example).

What all of that means is that the deal making around "ecosystems" and platforms will lead to an end-user base forced into the age old (and supposedly no longer relevant) question of "which SaaS platform." I guarantee that as we move out of this year's SaaScon this will be the primary question that end-users are asking.

All in all, SaaScon has rode along on the topsy-turvy journey that has been the maturing of the SaaS market. This year promises to bring a depth, maturity and interest from end-users that we've never seen before. There are now an awful lot of SaaS-related events, but I think that SaaScon's journey to maturity as a vendor-neutral conference separates it from the pack, and as the co-founder I'm feeling like a bit of a "proud papa." I hope you'll join us.