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Global Insight Big Picture Onwards and appwards Software developers are moving towards cloud-based solutions, turning software into apps that no longer reside on the desktop. ‘Software as a service’ is where the future of IT lies, says Peter Griffin When technology entrepreneur Rod Drury said he planned to build the “Nokia of the South Pacific”, many of his fellow New Zealanders applauded his ambition, but expected him to fail. They didn’t count on the ‘software as a service’ (SaaS) revolution, which is transforming business, as the tools that keep companies running migrate to the cloud. In Drury’s case, it wasn’t literally the mobile phone he had in mind – but accounting software. Frustrated with the clunky desktop software packages dominating the market, he developed Xero: an online, subscription-based service that does for accounting what Gmail does for email – makes it simple, more productive and accessible from any device, anywhere in the world. Last month, Xero became the second most valuable company listed on the New Zealand stock exchange with a market cap of around US$5 billion – bypassing electricity companies, banks and the national carrier Air New Zealand. Xero joins a field of SaaS players that includes Demandware, Workday, ServiceNow, Rally Software and Marketo – all publicly listed companies with multi-billion dollar valuations that have emerged in the space of a few years. Along with established players such as Oracle, Intuit, SAP and Salesforce.com, which are already delivering their applications from the cloud, these SaaS companies represent a global market for apps that IT analyst group IDG estimates will reach $67 billion by 2016, up from $24 billion in 2011. The power of detaching 18 l www.global -br ief ing.org f i rst quar ter 2014 global


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