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SaaS: Enterprises Begin to Say 'Yes'
Enterprise adoption of On-Demand solutions has increased from 12 percent in 2006 to 16 percent in 2007, a jump of more than 30 percent, but still small compared to the size of the traditional software market. So says Forrester Research in their study Competing in the Fast-Growing SaaS Market in a survey of 1017 technology professionals. Adoption in the US is nearly double than in Europe.
The number of companies interested in starting or piloting a SaaS application remained flat at 46%, while the number who had no interest in SaaS dropped from 41 to 37 percent. Reasons for the popularity of SaaS include a shorter implementation cycle, and the pay-as-you go model with small up-front costs.
Companies not yet using SaaS cited the difficulty of integrating SaaS applications with in-house apps or with other SaaS applications. 65 percent thought integration was a major reason for not using On-Demand. Traditional software offered more APIs to support customizability and connectors to other applications.
Many also thought that while the SaaS subscription model was cost-effective in getting the application up and running, in the long run they worried that costs might actually exceed that of traditional in-house software.
Other issues mentioned by those not using SaaS include concerns about security and housing sensitive data outside the company, security and scalability.
SaaS is having a hard time moving from it’s core set of applications, which continue to remain Customer Relationship Management (CRM), Human Resources and Collaboration. Application adoption in areas like Document Management, ERP, and Supply Chain Management remain small. Of those companies that are using SaaS, 45 percent cite CRM as the SaaS application that they’re using. 22 percent are using SaaS for hosting Web 2.0 type applications like wikis, blogs and RSS.
