How does the demand side look in India?

Large enterprises already have experienced benefits of IT for over 10 years. They need SaaS to mature more and for standards to effectively address data privacy, security and application integration issues. The SMBs constitute the largest potential for SaaS providers at the moment. This is the long tail I referred to earlier. Now the big question is when would they start buying SaaS solutions?

They typically would have invested three to five hundred thousand rupees in obtaining various customized IT solutions to meet their needs and can be expected to be happy with them. Due to their existing investment, they would also be the hardest to move. Besides value proposition in SaaS, vendors need to convince them about the security (technology has improved, though its true availability needs to be ascertained as yet) and privacy of data, which is important as data moves to third party servers. We may see emergence of more hybrid solutions such as Microsoft’s Software + Services paradigm, under which data resides at customers (on-premise), while the software runs at a third party infrastructure (data accessed over the cloud).