Gartner: Enterprises Are Getting More 'SaaS-y'

• By Jim Barthold
• 12/09/08

Enterprises are starting to appreciate software as a service (SaaS) and plan to maintain or grow their SaaS use, according to a survey conducted by Gartner, tapping 258 respondents.

"Nearly 90 percent" of organizations "expect to maintain or grow" their SaaS use, Gartner found. The survey polled individuals responsible for implementing enterprise software in organizations. It was conducted across eight countries in June and July.

The results indicated that SaaS is increasingly seen as a way to offload on-premises software systems to save money and drive change within corporate environments. While that sounds positive, SaaS is "not good for all things," said study author Sharon Mertz, a research director at Gartner.

SaaS is not the appropriate choice for organizations with security policies prohibiting off-site access, she explained.

"It's also not appropriate for all applications," Mertz said. "If you have a very complicated business process that is tightly integrated with on-premises systems or other back-end applications, it may not be sensible to try to extract a piece of that and use it as software as a service."

Increasingly, though, SaaS, unlike its ASP predecessor, seems to be arriving at the right place at the right time. Greater access to broadband connections worldwide is helping the case for SaaS delivery. Also, SaaS vendors have been carving out niches for themselves by delivering customized software to meet specific corporate needs.

"It's becoming a more accepted way to handle your computing requirements," Mertz said. "There is less concern than there was in the past with uptime [and] less concern with security."

There's also less resistance to SaaS from IT departments, she added, since "we found in the survey that a lot of the decisions on SaaS were joint decisions between the business and IT."

Size matters when it comes to SaaS. Small-to-medium businesses lacking IT resources may consider using such services. It's also gaining some traction with larger enterprises that traditionally have run computing resources at their own premises.

For SaaS adopters, a big decision is which platform to use. Providers include Microsoft, Oracle, SAP, Force.com and others, Mertz said. Microsoft sells its hosted solutions directly while also relying on its partner network to deliver customized solutions.

Some critical computing applications probably will never leave the corporate confines. For those considering SaaS, the key is accepting that not every software application will require on-premises hands-on attention, Mertz said.

"You don't want your IT guys to be doing things that can be more cost effectively handled by a service like SaaS," she concluded.

Among the North American survey respondents, 62 percent expected to see "slight increases" in new SaaS investments and 15 percent expected to see "significant increases." Those numbers were 49 percent and 15 percent in Europe, and 55 percent and five percent in the Asia-Pacific region, respectively.

The survey also found that 37 percent of the respondents were transitioning from an on-premises solution to SaaS.

SaaS growth will depend mostly on future improvements in SaaS technology platforms.

"It's not just something like expense reporting, which has been available as a service for years," Mertz said. "It's something that's more germane to the business process and they're going to need to have it integrated with their backend systems and they're probably going to want more functionality. That is one of the things that the survey validated."