Report is in: SaaS applications model will take firm hold in new sectors

By Manufacturing Business Technology Staff March 16, 2009

Software-as-a-Service (SaaS) is gaining traction in areas such as Web conferencing, collaboration, and IT service management (ITSM). These categories will experience significant SaaS success over the next decade, according to a report published by Cambridge, Mass.-based Forrester Research .

The study evaluates the top 14 SaaS application technologies based on growth and greatest potential for success.

“SaaS applications have advanced beyond early market applications in human resources and CRM to become a game changer in the enterprise software market,” says Liz Herbert , senior analyst, Forrester Research. “SaaS adoption continues to increase, and it is now relevant for a wide array of applications. This new research provides strategic direction to end users evaluating SaaS technologies and planning their next decade of investments.”

Forrester predicts that the following technologies are poised to experience significant success in the enterprise market:

Collaboration. Although its long-term future is unproven, Forrester’s market data has shown SaaS collaboration to be one of the hotter areas of SaaS adoption, with the potential to significantly impact the collaboration market.

Web conferencing. Already heavily SaaS-based, Web conferencing technologies continue to move in that direction. It is an ideal candidate for SaaS, and many companies are comfortable using this technology as SaaS.

Customer relationship management (CRM). One of the earliest categories where SaaS adoption took off, this category is already mature; however, some companies with established on-premise CRM strategies will be slow to—or in many cases will never—switch over.

Human capital management (HCM). SaaS deployment of HCM/HR solutions has been popular, however many of them have been niche solutions by small vendors. Consolidation in this space has started to create broader suite offerings, increasing the potential growth of these technologies.

ITSM. These solutions in the SaaS model are growing in popularity, but many of the larger vendors have yet to enter this space. As established vendors continue to enter the market, SaaS has the potential to transform the world of IT applications.

Online backup . Particularly for small and medium-size businesses (SMB), PCs, and remote location, online backup has already attracted strong interest. One area of concern is recovering large quantities of data in a short time frame.

Forrester predicts these technologies will have minimal success using the SaaS model:

Business intelligence (BI). The SaaS BI space is largely unproven. Though there are early adopters, many are still skeptical as to its potential, particularly where large volumes and real-time data transfer are concerned.

Integration. As SaaS solutions flourish in the enterprise, SaaS-specific integration solutions will naturally rise, too. However, firms should not expect any magic integration solutions, SaaS or otherwise.

Other technologies evaluated in the report include archiving, digital asset management, enterprise content management, enterprise resource planning, supply chain management, and Web content management.