• October 12, 2005
  • By Colin Beasty, (former) Associate Editor, CRM Magazine

SMBs Are Adopting SaaS Verticals

AMI-Partners' recent report "Software-as-Service Hot Spots: Construction, Healthcare, and Financial" estimates that 500 SaaS vendors operate in North America now, and that offerings from these sectors are proliferating at an especially rapid pace. The report also states that although most providers have concentrated on horizontal business applications markets like CRM, document management, and human resources, an increasing number of SaaS solutions are tailored to the needs of vertical industries. "For the most part industry-focused [SaaS] vendors are smaller firms that strive to provide customer applications with the features, functionality, and business processes required by their respective verticals," says Sau Lam, research analyst at AMI-Partners. "Opportunities abound among SMBs." Vendors zeroing in on the industry-specific needs of SMBs in the construction, healthcare, and financial services markets are doing a good job of addressing collaboration, both among internal employees and with external contractors, partners, and customers, according to the report. They also are providing solutions that allow for the access of information anytime, anywhere. "We found an abundance of vendors in this area," says Laurie McCabe, vice president of SMB insights and business solutions at AMI-Partners. "There are some really big drivers for (SaaS) in these verticals. Some are generic, but there are also a lot of specifics." Construction might not seem an obvious choice, but the industry's reliance on multiparty information has resulted in a "huge need to exchange information to get things done on time and on budget," McCabe says. "Vendors are creating everything from product management to field service and supply chain management programs so contractors have access to back-office databases via their cells and PDAs." In healthcare, an industry plagued by high cost and inefficiencies, the government is playing a large role in the adoption of SaaS. Because government foots a large portion of the national healthcare bill (46 percent according to AMI-Partners), its organizations are "looking for a way to reduce costs that will force healthcare providers to streamline their paper trail with information systems and solutions. IBM is working on a solution to do on-demand information management. Also, smaller vendors are focusing on practice management, such as digital medical records and imaging, so doctors can run their practice more efficiently," McCabe says. For financial services, government regulations of both public and privately held companies are forcing banks to adopt record systems similar to the healthcare industry's, according to McCabe. In addition, smaller vendors are helping smaller banks adopt Internet banking so they can compete more effectively against larger competitors. The adoption of SaaS solutions in the SMB market is relatively low, but it's gaining speed. Twenty percent of SMBs plan to adopt an SaaS solution within the next 12 months, and the rapid penetration of high-bandwidth Internet connectivity combined with the increased focus by vendors to provide solutions specifically targeted for this market is helping, according to the report. "There is an increasing number of (SaaS) solutions specifically targeted for the SMB market," McCabe says. "Need, opportunity, and vendor interest is coming together." Related articles: High-Tech Goes After SMBs
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