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SaaS and CRM: 30 Percent Penetration by 2012
Gartner points to the continued evolution of software-as-a-service implementations.
Posted Dec 12, 2008
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Recent research from Gartner analyst Michael Maoz predicts that by the year 2012, 30 percent of investments in CRM will be via software-as-a-service (SaaS). In fact, based on his research, Maoz believes that not only will 30 percent of companies turn to SaaS within the next three years, but startup enterprise-software vendors are finding it difficult to secure funding unless they have a delivery model that is based on cloud computing or SaaS.

"Cloud computing overall -- it continues to gather speed," he says. To illustrate, Maoz talks about a recent trip to Israel to visit with several of the nation's software startups. "Out of five [companies], not one was on-premises software -- not one," he says. "Every one was cloud computing, or software-as-a-service. When I spoke with them, the answer was, ‘We cannot conceive a venture capital company giving money to someone who doesn't deliver their software in the cloud.' That's pretty shocking."

Gartner research indicates that the increased deployment of SaaS initiatives might have underwhelming implications for consulting and professional services. Maoz explains that many companies view software-as-a-service applications as plug-and-play. The implementations lack process involvement and merely connect applications in the cloud, rather than looking at the bigger picture of business process management. "CRM is not just the technology," Maoz expels. "It's more an issue of ‘How do I interact with my customer?' Using some of these SaaS applications without changing the business process could be just enabling [organizations] to do bad things even worse." In other words, without a bottom-up approach, deploying new applications in the cloud is automating a tired or flawed process. "Using software-as-a-service is not going to help CRM," Maoz states. "We shouldn't be enamored by cloud computing instead of in lieu of process improvement."

However, services in the cloud continue to build momentum. In fact, a recent Gartner survey reveals that nearly nine out of 10 organizations expect to maintain or grow their usage of SaaS products within the next 12 months. Reasons for adoption include cost-effectiveness and ease and speed of deployment. Despite promising growth for SaaS, Maoz is wary of the effect of SaaS on the customer. "At end of the day, it's ‘Has the customer become more loyal and more interested in doing business with you rather than the competition?' You don't hear a lot of that story [with SaaS deployments]," Maoz says. "For a message of ‘no software,' it sure sounds like software." He correlates business process management with customer experience and satisfaction: When the former takes a hit so does the latter.

Maoz notes that SaaS has shown to be ideal with low-complexity, smaller organizations. In terms, of highly complex, large enterprises, the proof of purchase is not there, yet. Although it is growing in terms of adoption and plans of  adoption, there is still a lot to be considered.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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