SaaS Adoption: Skyrocketing on All Cylinders! - Saugatuck Technology
What Is Happening? Customer adoption of SaaS is now accelerating across all customer segments, industries and geographies, reconfirming our recent assessment that SaaS is now beyond the "tipping point ." Saugatuck research shows that not only have more than 26 percent of companies installed at least one SaaS application, representing nearly 150 percent year-over-year growth, but resistance has plunged dramatically, in terms of firms that are not planning to deploy SaaS.
Across all size companies, and in all geographies, adoption of SaaS will continue to boom, with another 20 percent either prototyping, implementing or planning to install their first SaaS application in 2007. Adoption rates are even higher in the North American market and in Large Enterprises -- although Europe is poised to double its adoption of SaaS by 2008.
Why Is It Happening? In January and February of 2007, Saugatuck initiated its 2nd Annual SaaS Research Program, that has included a worldwide web survey of 250 IT and business executives, 30+ deep dive briefings with leading SaaS providers and 15+ executive interviews (see Notes 1 and 2).
As Figure 1 illustrates, the results from our research show a dramatic increase in the percentage of executives who plan on using SaaS. The percentage of respondents with one or more SaaS solutions in place in 1Q 2007 (worldwide) is now greater than 26 percent, compared with 11 percent in a similar web survey that Saugatuck conducted in early 2006. When we add to this figure solutions currently in either a prototype or implementation phase, as well as implementations planned for 2007, total SaaS penetration worldwide jumps to 47 percent by YE2007. Equally striking is the reduced resistance to SaaS -- with companies indicating that they had no plans to implement SaaS falling from 26 percent in 2006, to 8 percent in 2007.
Find below some of the additional key findings that are detailed in the companion 6-page Strategic Perspective entitled SaaS Adoption Tsunami: Redefining Software and Services (MKT-331, 27Mar07):
-
While the sweet spot for SaaS adoption over the past year has been SMBs -- particularly mid-market -- the next surge of growth will come from Large Enterprises who are now beginning to view SaaS as just another part of the fabric of enterprise IT.
-
SaaS is beginning to penetrate and radiate within organizations, across all segments; on average Large Enterprises that have adopted SaaS now have 3.4 SaaS applications deployed , with one in seven having greater than 10 SaaS applications.
-
Resistance to deploying mission-critical applications via SaaS is diminishing dramatically -- foretelling a continued evolution in the varieties of SaaS and related business services that will be embraced.
-
While North America continues to lead in SaaS adoption, Europe is poised to enter a breakout adoption phase in 2007 -- doubling the number of companies that deploy SaaS for the first time. By 2008, North American adoption will have reached at least 56 percent, with Europe nearly 42 percent, and the rest-of-world at 28 percent.
Market Impact: What is becoming clear is that SaaS will ultimately become a ubiquitous global phenomenon -- impacting all sectors and categories of the business technology landscape. However, with this growth comes an increased sophistication; users are now entering the buying process with much greater knowledge than in the Early Adoption wave -- newly fluent in such concepts as multi-tenancy, web services APIs, data and workflow integration and mashups -- even though users may not require them all in the SaaS business services they contract.
Given this, and the fact that SaaS ultimately is all about creating business value (and not about the underlying technology that delivers it), we recommend that SaaS and potential-SaaS providers focus on and address some of the most important business-related issues that are emerging for users, such as:
-
integrating SaaS workflows with the enterprise's business processes
-
collaboration across business units or other enterprises
-
customizing business workflow; and
-
utilizing built-in analytics and importing and exporting data (among others).
As the adoption of SaaS continues to accelerate across geographies, industries, and companies large and small alike, SaaS providers will need to differentiate their offerings -- spanning the increasing profusion of ad-based services, specialized niche offerings, full-feature offerings, vertical offerings, IT-targeted offerings, marketplaces, ecosystems, managed services and business process outsourcing based on SaaS. The bottom line, however, is that SaaS is now entering the fabric of IT, redefining software and services worldwide.
Note 1:
Saugatuck 2nd Annual SaaS Research Program
Saugatuck will soon publish its newest original 30-page research report, tentatively titled "SaaS 2.0: Beyond the Inflection Point" (mid/late April).
The report is based in part on a new worldwide web survey of 250 senior business and IT executives, 30+ briefings with leading SaaS providers and 15 deep dive interviews with early adopter SaaS users. The report will update our SaaS adoption scenario, and fine-tune our SaaS 2.0 vision in areas such as pricing and licensing, ecosystems and verticalization.
For more information about this report, including single-user and multi-user licensing plans, please contact Chris MacGregor, Analyst and Media Liaison, at 203-454-3900, or at chris.macgregor@saugatech.com.
The authors invite your comments and inquiries on this Research Alert. Please contact Mike West at mike.west@saugatech.com or Bill McNee at bill.mcnee@saugatech.com .
For a PDF Version of this Research Alert please Click Here (Site Registration Required)
Browse Related Research:
_______________________________________________
>> Back to Main Page
Gary E. Smith
SaaS Network Architect - SaaS in a Connected World
Comments