A new report claims the software-as-a-service (SaaS) market is set to double in size during 2007, with 41 percent of respondents planning to spend part of their current budget on SaaS applications, yet only 23 percent currently do so.
By Stephen Withers
While only 8 percent regard SaaS as a strategic direction, a further 77 percent of respondents said they are open to considering SaaS on a case-by-case basis. CRM, salesforce automation and finance are expected to be the major growth areas. Substantial growth is also expected in the use of business applications via mobile devices - a field well suited to SaaS.
Fifty eight percent of respondents expected to see an increase during the the next 12 months, with a 105 percent increase in the number of staff using business applications in this way. Of those using SaaS already, 82 percent said the applications met or exceeded their expectations and business needs.
"Fifty eight per cent of respondents using SaaS recorded significant gains in operational efficiency. Forty per cent have experienced increases in revenue,” said Dr. Catriona Wallace, director, ACA Research.
One fly in the ointment is that only a minority - less than 22 percent of the sample - could accurately define the SaaS model. While it is likely that this was simply an inability to articulate the concept among current users of SaaS, we have to wonder how much of the measured enthusiasm among would-be users is misplaced.
Stated barriers to adoption include concerns about security, loss of control, and bandwidth requirements. On the other hand, on-premises applications are seen as expensive to run, with an average of 29 percent of IT budgets going on software maintenance. "Respondents also indicated they were struggling with software upgrades and staff shortages" said Wallace.
SaaS is seen as a way of reducing the total cost of ownership, and the savings made will be redirected to new hardware or hardware maintenance. (We would have expected hardware requirements to fall with the adoption of SaaS, but perhaps respondents have been forced to extend the life of existing hardware due to funding shortages.)
The research was conducted by ACA Research, and involved a phone survey of 120 senior IT executives and line-of-business managers between 25 October and 1 December 2006. Although the survey was sponsored by Salesforce.com, responses from the company's customers were calculated separately.
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