SMBs Lead, Big Business Follows on SaaS

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Large enterprises are the usual technology trendsetters, with SMBs waiting until prices fall or solutions are more fully tested before they adopt them.


There has been a notable exception, and it's one that many folks, including "The End of Sofware" author Timothy Chou, see as the most disruptive technology of the last decade. Of course, we are talking about software-as-a-service, which Chou says in a recent eWEEK article is leading to a "huge transition."


SMBs were among the first and most enthusiastic adopters of SaaS and still continue to drive much of the spending. According to AMI-Partners, SMBs globally will spend some $2.44 billion on SaaS this year, a 17 percent increase over 2006. In particular, SMBs are interested in applications that they might otherwise be unable to afford in a traditional licensing model, such as business intelligence.


Yet SMBs are not the only companies using SaaS. As ZDNet blogger Phil Wainewright points out, SaaS has also gained traction in plenty of big enterprises -- though it's occurred largely under the radar. Big companies are notoriously press shy and loathe to associate their names with a vendor, especially in an area that is not yet mainstream, says Wainewright.


He notes that after a press release appeared announcing an 85,000-seat SaaS deployment at Wachovia Bank, several other SaaS providers contacted him to let him know they had deployments in excess of 100,000 seats -- but unfortunately, no clearance from customers to reveal the details.


Enterprise technology trends rarely remind us of Disney flicks, but this is the rare exception. Remember the film "Freaky Friday?" In the SaaS example, SMBs would play Jodie Foster's misunderstood teenager, who switches identities with her mom.


SMBs enjoy the distinct advantage of fewer layers of bureaucracy when making technology purchasing decisions. Problem is, budget limitations often prevent them from following through. That's why SaaS has been such a good fit for them -- such a good fit that a growing number of big companies are willing to try it as well.