Gartner: SaaS Acceptance Continues to Grow

Ann All

Earlier this month I wrote about a THINKStrategies survey that found largely rosy attitudes about software-as-a-service from current users and serious consideration of SaaS from non-users. I noted that survey got a stronger vote of confidence for SaaS than Gartner did when it conducted a SaaS survey last summer. Positive sentiment for SaaS continues to grow, however, based on a more recent Gartner survey.


Gartner found 95 percent of organizations currently using SaaS plan to maintain or increase their current investment levels. According to a ComputerWeekly story about the survey, 53 percent of organizations expect to increase their SaaS investment levels slightly and 19 percent significantly. Nearly 25 percent of respondents said they expect investment levels to remain about the same, while 4 percent expect a slight decrease in investment levels.


In last summer's survey, 58 percent of respondents said they'd maintain their current SaaS levels, while 32 percent planned to add more. Five percent said they'd scale back, and another 5 percent planned to eliminate it. Though the questions seem to have been phrased a bit differently in the two surveys, the numbers of those increasing SaaS investments rose a bit in the second one, while the numbers scaling back on SaaS fell. That seems to show continued and growing acceptance of SaaS.


The main reasons for adopting SaaS, according to respondents of the latest survey: integration requirements, a change in sourcing strategy and total cost of ownership. I found these interesting, since both integration issues and higher lifetime cost have often been cited as common reasons for avoiding SaaS. Indeed, both were mentioned by respondents to the earlier Gartner survey.


However, vendors like are working to make integration less of an issue for companies purchasing applications in the cloud, and SaaS vendors are forming alliances to offers customers plenty of pre-integrated offerings. And compelling cost stories continue to emerge, such as the 20 percent-plus reduction in annual software maintenance fees enjoyed by Bosley Medical Institute after switching to SaaS.


Maybe more are wondering, like Ingres CIO Doug Harr, "what happened to the calculators" of those concluding TCO for on-premise software is lower than SaaS' TCO over time. When I interviewed him last year, Harr told me the upfront fee for the on-premise software he purchased for his previous employer was more expensive than seven years' worth of a similar number of monthly seats for Salesforce. The SaaS financial advantage becomes more pronounced if the cost of software maintenance, upgrades and personnel required to run it is factored in, he said.


Despite SaaS' growing popularity, Gartner found just 39 percent of companies had policies governing evaluation and use of SaaS. This presents opportunities for SaaS providers, said Sharon Mertz, research director at Gartner. She predicted SaaS customers will seek assistance with initiatives ranging from process redesign to implementation to integration services. That's pretty much what Ross Tisnovsky, vice president of research for Everest Group and author of a recently published study titled "Hype and Reality of Cloud Computing - Mind the Gap," told me when I interviewed him last week.


Cloud providers position themselves as advisers, resellers, orchestrators, enablers and engines, Tisnovsky said. He considers orchestrators and enablers the most valuable. Orchestrators help with specific needs such as security and data management, while enablers provide more of an end-to-end solution. Said Tisnovsky:


The thing that not many buyers understand, if you go and get resources from Amazon, they do need to be managed.

Add Comment      Leave a comment on this blog post
May 3, 2010 9:04 AM Phil Simon Phil Simon  says:

All of this to me indicates SaaS' growing acceptance and maturing. Add to this recent announcements such as Lawson's decision to use Amazon to provide cloud services. Enterprise 2.0 is continuing to gain traction.

May 5, 2010 8:42 AM Jessica Jessica  says:

I agree, SaaS is an area of web development that is continuing to grow and offers many advantages over on-premise solutions. We have outlined the pros and cons in our blog, which is accessible via the link for anyone who wishes to read more on the topic.


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