SaaS Is a Four-Letter Word for SMBs

Although SaaS solutions are often touted as ideal for SMBs, many smaller businesses still hesitate to explore the on-demand model, according to a new survey conducted by IDC. The study, "The Adoption of Software as a Service in Small and Medium Businesses: Perception Versus Reality," finds the market for SaaS to be growing rapidly despite SMBs' enduring fear regarding data security. IDC recommends that vendors selling on-demand solutions do so by highlighting how the applications can solve business problems rather than attempting to use SaaS itself as a selling point. "Especially among the smaller firms, there's still a level of suspicion [surrounding SaaS]. You don't want to entrap mission critical data somewhere in outer space," says Merle Sandler, senior research analyst for IDC's SMB Markets program. However, Sandler explains that it is perhaps the concept of SaaS and not the service itself that companies are wary of. In fact, the study found that a higher percentage of companies reported that they were receiving applications delivered by a service than they were "using SaaS." This discrepancy may come from an aversion to the word "SaaS." The study found data security concerns to be the top reason why companies will not use SaaS. This was the top concern for both small and medium businesses, followed by a fear of being tied into a service that will continue to cost the company on a monthly basis. Sandler says that for the most part, these fears are unfounded, and that solutions are much more stable and reliable than many companies assume. She says that for SaaS vendors, "You have to emphasize that the things are secure." In spite of trepidations, IDC finds that SaaS adoption is continuing to rise. Out of the 614 small business surveyed, 5.1 percent plan on moving forward with a SaaS solution within the next year; 15.2 percent of the 418 medium businesses plan to do so as well. More vendors are developing on-demand solutions and more small businesses today have high-speed Internet connections that support them. To best sell SaaS solutions to SMBs, IDC recommends that vendors focus on the benefits of the solution itself rather than the benefits of an on-demand solution in general. Eventually, Sandler says, SMBs will come around to the benefits of on-demand, such as low implementation costs, quick go-live times, and flexibility. "If you speak to them, it's always been more successful than they thought it would be," Sandler says of SMBs who have implemented SaaS solutions. "It's such a logical way for them to get the software. As they get more comfortable with it and have more services in place, slowly they will accept it." Related articles: The Cost of Live-ing Unicorns, Yetis, and SaaS Dangers SMBs Love Web 2.0