Study: SaaS Adoption Accelerating

Aug 22, 2006

Michael Hickins

More companies than ever before see software-as-a-service (SaaS) in their futures.

A new study from Aberdeen Group shows that companies of all sizes have begun adopting SaaS in order to get solutions implemented more quickly, achieve faster ROI and lower their IT costs.

The study shows that businesses are also adopting SaaS for a greater variety of applications than ever before.

"More than half the companies we surveyed are using or are interested in exploring the possibility of using software as a service in the future," said Beth Enslow, senior vice president for enterprise research at Aberdeen.

"It's no longer a minority of companies."

Enslow told that 2006 marks the first year that this is the case.

SaaS is now considered a quick way to resolve a pressing business issue, with quick ROI and lower total costs of ownership (TCO).

According to the study, 74 percent of companies said they implemented a SaaS customer relationship management (CRM) solution in two months or fewer.

These same companies also reported achieving ROI in six months or fewer.

"Those numbers are two to four times faster than what we're used to seeing with traditional on-premise enterprise applications," noted Enslow.

Moreover, said Enslow, this type of metric is not limited to CRM.

"It's not like these benefits are a fluke limited to CRM. We're seeing these types of results consistently across all the major application areas."

The Aberdeen study also puts the lie to the conceit that the market for SaaS is limited to small and medium sized business (SMBs) needing a CRM solution.

She credited the success enjoyed by early adopters of the SaaS model with changing minds among executives at large enterprises.

"It's the track record. They see their peers start to use it, and see people get consistently solid results," said Enslow.

That said, CRM remains the most widely adopted SaaS solution, with 84 percent of SMBs and 69 percent of larger enterprises using or considering the adoption of an on-demand CRM solution.

Such areas as financial management, product lifecycle management (PLM), procurement and sourcing, and supply chain management (SCM) are adopting SaaS.

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