SaaS by the numbers: On-demand software continues to gain ground in business deployments

More current business management application deployments are run in-house on traditional installed licenses, but with new implementations, Software-as-a-Service (SaaS) is gaining ground, reports Scottsdale, Ariz.-based In-Stat.
By Manufacturing Business Technology Staff May 28, 2008

More current business management application deployments are run in-house on traditional installed licenses, but with new implementations, Software-as-a-Service (SaaS) is gaining ground, reports Scottsdale, Ariz.-based In-Stat .
Over the next 12 months, of the number of U.S. organizations initially implementing a business management application such as ERP or CRM, the percentage implementing a SaaS solution will approach the percentage of organizations deploying traditional licenses in that market.
Along with gauging demand for business management applications (CRM, ERP, etc.) delivered as a service, In-Stat also looked at demand for Microsoft Office-esque productivity applications delivered as a service.
“While generally targeting smaller offices with often basic computing needs, office productivity applications delivered as a service are gaining some traction in larger firms,” says Jeff Jernigan, In-Stat analyst. “Roughly 15 percent of 100-plus employee firms that currently use traditional installed office productivity applications indicated in an In-Stat survey that they plan to implement or try a hosted model in the next 12 months.”
Other research notes:
• Accessibility to applications by remote or mobile workers is an important benefit to current SaaS users as well as those who are interested in SaaS.
• The main inhibitors to SaaS adoption are security concerns for larger companies and a lack of perceived total cost of ownership benefits for smaller companies.
• Four out of five hosted productivity application users would recommend using them to colleagues and plan to use them as much or more in the future.
The research, SaaS Slowly Displacing Installed Business Applications , covers the U.S. business market for SaaS. It provides a forecast of SaaS revenue in the U.S. business market through 2012, and also contains analysis of a recent survey of U.S. businesses regarding SaaS. Discussion of market drivers and barriers is provided.