Software as a service is taking a big bite out of the licensed software market in the enterprise.

Recent analysis by Synergy Research Group found that global spending for cloud-based software will exceed $100 billion next year and is growing at 30% annually. If software is truly going to eat the world, then SaaS has devoured the appetizers and is well into the first course.

Fueling enterprise appetite for SaaS products is a growing application layer in the cloud stack and the evolving role of software in an industry driven by innovation and risk, according to one experienced tech industry leader.

“With a SaaS form factor, you can take a little more risk,” said Howie Xu (pictured), vice president of machine learning and artificial intelligence at Zscaler Inc. “Innovation and risk taking are correlated. With shrink-wrapped software, you traditionally have one shot, and if that software is not good, then you are toast.”

Xu spoke with John Furrier (@furrier), host of theCUBE, SiliconANGLE Media’s livestreaming studio in Palo Alto, California. They discussed the role SaaS will play as the enterprise infrastructure expands and advice for entrepreneurs seeking to build new companies in a cloud-based world. (* Disclosure below.)

SaaS fills key needs

Xu’s view of the evolving SaaS world comes from the perspective of an executive who has seen development of the cloud-based enterprise firsthand. He founded the networking division at VMware Inc., managed the cloud and networking services division for Cisco Systems Inc., and worked with the venture firm team that incubated companies such as Docker Inc., Palo Alto Networks Inc. and Facebook.

What these experiences have taught him is that SaaS will fill a very important need as the enterprise infrastructure grows in size and complexity.

“You cannot possibly build all the infrastructure yourself; you will have to consume public cloud and sometimes hybrid cloud,” Xu said. “You are also going to consume SaaS, whether it’s Zoom or Zscaler or PagerDuty. You’re not going to build those things from scratch, but you want a very good stack on top of it.”

How about entrepreneurs who are faced with critical infrastructure decisions as they build their own companies? In addition to leveraging the many SaaS-based companies in the market, Xu has another piece of advice: Don’t forget about the role of data and AI.

“If you look at the next 20 years, a lot of the lift is going to be done by the AI side,” Xu said. “It’s not going to be easy. You have to think about your data strategy.”

Watch the complete video interview below. (* Disclosure: Zscaler Inc. sponsored this segment of theCUBE. Neither Zscaler nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE