Almost three quarters of organisations believe that server virtualisation will drive the adoption of software as a service (SaaS) with most of them aiming to adopt SaaS within five years.

That's according to a survey of 100 IT directors commissioned from Vanson Bourne by web hosting firm Hostway, which also found that it had been the lack of available virtualisation technologies that had held back the uptake of SaaS products.  Prior to the emergence of virtualisation technologies, service providers faced a number of difficulties around offering SaaS affordably and reliably as an outsourced business service. As a result, 71 percent of companies do not use SaaS today.

Many of these problems have now been overcome, and with the promise of reducing overall software licence spending for larger companies as well as helping smaller companies adopt typically enterprise level software without large upfront investment, it is unsurprising that the survey found that two-thirds of organisations aim to adopt SaaS within the next five years.

Neil Barton, director at Hostway, said: “Companies are certain that SaaS will make their application usage more cost-effective because of the reduction in software management costs, and the ability to eliminate buying too many or too few software licenses.”

Increasingly sophisticated SaaS offerings are also likely to entice more organisations down the software renting route, according to Forrester analyst Liz Herbert. In a report, What Evolving SaaS Options Mean For Buyers, she said some providers are looking at newer technologies such as AJAX, Flex, and “smart” clients to improve usability and performance, Herbert said.

“Some SaaS providers have shifted to a “smart” client, which has some components that reside on the client machine allowing for benefits such as: better integration with productivity applications such as Microsoft Office, higher performance, and access while disconnected,” the report noted.

Pricing models are also getting more complex, with some applications beginning to be charged on a combination of users and throughput. End users are also increasingly able to have a say in the upgrade timetables, with “Providers … increasingly moving to a more flexible model where firms have some say over their upgrade timing, within a specified window,” according to Herbert.