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Gartner: SaaS adoption on the rise

IDG News Service | May 7, 2010
More than 95 percent of organizations expect to maintain or grow their use of software as a service (SaaS), according to Gartner

HONG KONG, 5 MAY 2010 - More than 95 per cent of organizations expect to maintain or grow their use of software as a service (SaaS), said Gartner Tuesday (4 May).

The research firm lately unveiled results of a survey where respondents cited significant integration requirements and a change in sourcing strategy as the top two reasons for adoption followed by high total cost of ownership (TCO).

The survey, said Gartner, was conducted in December 2009 and January 2010 and involved 270 IT and business management professionals from a variety of industries in North America, Europe, and AsiaPacific who were personally involved in the implementation support, implementation, planning and/or budget decisions related to the purchase of enterprise application software.

However, most companies still don't have policies governing the evaluation and use of SaaS with only 39 per cent of respondents indicating that such a policy or process exists, up just 1 percent from 38 per cent in 2008, said Gartner.

"SaaS applications clearly are no longer seen as a new deployment model by our survey base, with almost half of those surveyed affirming use of SaaS applications in their business for more than three years," said Sharon Mertz, research director at Gartner. "The varying levels of maturity within the user base suggest growing opportunities for service providers along the adoption curve, as organizations seek assistance with initiatives ranging from process redesign to implementation to integration services."

Popular SaaS apps

The scope of functionality of SaaS applications has broadened significantly in recent years, Mertz noted. In terms of popularity for SaaS usage, the survey showed that e-mail, financial management (accounting), sales force automation and customer service, and expense management are the most popular in terms of current use, with more than 30 percent of the survey base using these types of applications.

In terms of expected investment levels in SaaS offerings over the next two years, survey respondents gave generally encouraging responses for software and service providers, with on average 53 per cent of organizations expecting to increase investment levels slightly and 19 per cent significantly, said Gartner. However, not all buyers intend to increase usage, with almost one-quarter of all respondents expecting investment levels to remain about the same, and 4 per cent looking at a slight decrease in investment levels, the analyst house added.

In comparing current with new investments in future on-premises and SaaS investments within their organizations, 72 per cent of respondents believe

SaaS investments will increase, while 45 percent hold the same notion about on-premises budgets, according to the report.

Regionally, North America and Asia Pacific respondents indicated a stronger interest in procuring tools via a SaaS model, and, compared with those in Europe, show greater confidence that their organizations will increase investments in products offered as SaaS or through a subscription model through year-end 2010, Gartner noted.


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