Software-as-a-Service Gets Strong Loyalty Marks
Need more evidence of the traction gained by software-as-a-service (SaaS)? Nearly nine out of 10 organizations expect to maintain or grow their usage of SaaS products, citing cost-effectiveness and ease/speed of deployment as primary reasons for adoption, according to a recent Gartner survey of 258 firms either currently using SaaS, or planning to use it within the next 12 months.
The key drivers behind the use of SaaS, according to survey respondents, included:
- total cost of ownership,
- unmet performance expectations with on-premises solutions, and
- changes in sourcing strategy.
With the economy weak and financing difficult to obtain, companies are looking for ways to reduce upfront costs as well as total cost of ownership for technologies needed to run their businesses. North America was an early adopter of solutions delivered through the SaaS model, with more than 20 percent of respondents indicating use for five years or longer and 60 percent having adopted it in the last three years, according to Gartner.
Whether a software vendor provides its wares as an on-premises offering or via on-demand delivery, though, the keys to maintaining strong customer relationships are still the same, according to Gartner research director Sharon Mertz.
"Customers are looking for functionality and for excellent service," Mertz says. "Some clients want an on-demand solution like Salesforce.com, others want an installed solution like Microsoft [Dynamics] CRM." In either case, she adds, success in maintaining an ongoing software-as-a-service relationship depends on how the vendor works with the customer.
Though the keys to maintaining customers may be the same, a client opting for SaaS is unlikely to go back to an installed solution, according to Mertz. "Once a company uses SaaS, it becomes part of [that company's] process. If the solution is used and well received, customers tend to expand [SaaS] use to other parts of [the] business. More than 40 percent of organizations have used SaaS for more than three years."
Mertz adds that users are beginning to demand higher levels of functionality for SaaS solutions, sometimes prompting an organization to renegotiate its vendor contract before the term is up, either to opt for more feature-rich solutions, or to add more users as the organizational footprint expands.
The affinity for SaaS solutions is likely to grow even stronger in the current economic circumstances, Mertz says, due to the resulting need among small- and midsize businesses (SMBs) to carefully manage costs. Looking to the future, respondents cited two major drivers of upcoming SaaS deployments:
- replacement of on-premises solutions and
- net-new implementations.
In fact, more than one-third of respondents indicated plans to transition from on-premises software to SaaS.
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.
Are You Ready for SaaS?
You may think you are, but the truth is this: Size matters.
SaaS Rises in the East
The Asian market for on-demand software nearly doubled last year as awareness and adoption rates boomed; new report says satisfaction is high for CRM and other applications.
SaaS Will Increase Serving Size
A new IDC study predicts a focus on partnering, a movement toward on-demand, and an overall increase in software as a service availability.
At Your Service: Where SaaS Goes from Here
The "software-as-a-service" industry takes yet another big step toward the mainstream with a new release from Web-content management vendor Clickability that relies on a series of technologies delivered "as a service."
OpSource Sees SaaS Reigning In the Cloud
With its new OpSource Connect, the provider of software-as-a-service infrastructure sees mainstream acceptance of SaaS as a sign that the industry is primed to tackle integration now.
Is SaaS Ready for Its Contact Center Close-up?
Software-as-a-service continues to catch on, but observers differ on whether the not-so-new business model is right for contact centers
IBM Launches a SaaS Center of Excellence
destinationCRM Exclusive: The consultancy gathers its resources and expertise in software-as-a-service CRM -- and stresses that SaaS may not be right for everyone.
AMI-Partners Susses Out the Hot SaaS Vendors
A new report looks at several on-demand application providers who are worth keeping an eye on.
SaaS and CRM: 30 Percent Penetration by 2012
Gartner points to the continued evolution of software-as-a-service implementations.
CRM Market Grows for Fifth Straight Year
Software-as-a-service, analytics, and customer retention technologies help lead the way, according to a new Gartner report — and SAP retains the market-share crown.
Buyer's Guide Companies Mentioned