• March 3, 2008
  • By Jessica Tsai, Assistant Editor, CRM magazine

SaaS Is As Easy As 1-2-3, A-B-C

For years now, software-as-a-service (SaaS) has been the little engine that could -- and it's been gaining significant traction as more and more companies are turning to hosted, on-demand solutions, according to a report released today by Access Markets International (AMI) Partners. The report particularly underscores the growing adoption of SaaS among small and midsize businesses (SMBs), revealing that 21 percent of small businesses and 31 percent of midsize ones are using a SaaS model -- double the penetration seen in 2004. The consistent development of SaaS remains "steady" and "incremental," says Laurie McCabe, vice president of SMB insights and solutions at AMI-Partners. According to the report, SMBs are drawn to SaaS because the technology:
  • is easy to use;
  • is easy to implement and maintain;
  • requires limited infrastructure and technology resources; and
  • is increasingly available.
"There are, truly, many great SaaS solutions out there for SMBs, in almost every application area," McCabe says. Yet while SaaS technology may be readily available, adoption is hampered by the fact that many businesses still need to be educated about its benefits. The report states that SaaS adoption among midsize businesses is "significantly outpacing" penetration within the small-business sector -- in fact, midsize businesses are, on average, spending about six times more per year than their small-business counterparts are, and they're twice as likely to report a planned increase in spending in the next 12 months. "Small businesses are typically slower than [midsize] businesses to adopt any
new type of technology solution," McCabe says. "As a group, small businesses tend to be less knowledgeable about what's available, and more reluctant to try things than [midsize] businesses [are]." Aside from educating themselves, McCabe argues that there are no legitimate obstacles for smaller businesses looking to acquire a SaaS solution -- SaaS is an equal-opportunity model. The initial steps are remarkably simple, McCabe says -- and may be just what a small or midsize company needs to get the ball rolling: "Identify the business functions you need a solution for, and 'google' that function -- such as 'CRM and SaaS' -- to get an idea of the range of offerings out there," she advises. "Then try a few and compare." In fact, she adds, the most fundamental reason to turn to SaaS in the first place is that it's "easier to try and use than traditional packaged software." Furthermore, most SaaS solution providers will give a potential client the option to see its data in a live demo -- and some industry wags have noted that any vendor that won't let you test-drive its software should be immediately removed from consideration. Growth may be steady but McCabe predicts SaaS will take another three years to become truly accepted by the mainstream. It helps that big-name companies are also taking a dive into the SaaS pool, further extending awareness of the market. And the fact that SaaS solutions are now being peddled by established vendors such as Microsoft and IBM should also help boost confidence. As of now, the market has yet to ripen. "Our survey indicated that 34 percent of small businesses were not aware of SaaS, and 33 percent didn't think SaaS was relevant to their business[es]," McCabe laments. As a result, she adds, it remains the vendors' burden to convey the advantages and practicality of SaaS.

Related articles: Feature: It's All Coming 2.0gether As 2007 ends, and 2008 looms ahead of us, patterns are beginning to emerge: The future of business may not be in the hands of the executives, but those of the customer instead. And yet, hasn't it always been that way? 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. 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." Insight: SaaS X.0? The next wave of on-demand computing may just be another trendy "2.0" label. Salesforce.com Brings Utility Computing to On-Demand -- But Not to CRM The Force.com platform becomes the first software-as-a-service offering to allow pay-per-login pricing, but the company's CRM applications aren't included. The Tipping Point: Are You Ready for SaaS? You may think you are, but the truth is this: Size matters. SaaS Will Outpace the Rest of the Market A recent forecast predicts software-as-a-service will be the dominant source of the market's revenue growth. 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 Is a Four-Letter Word for SMBs Adoption of on-demand solutions by SMBs continues to increase, but many smaller companies are still wary of the concept of software-as-a-service, according to a new study. Viewpoint: SaaS and Web 3.0 Pointing the way. 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.
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