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Oct 13 2006

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SaaS penetration to reach 25% by 2011

ASPnews.com reports the latest projections for Software-as-a-Service (SaaS) growth from Gartner, who say SaaS will constitute 25 percent of new business software delivered by 2011, compared to just five percent in 2005.

The trend is upward, says Gartner, because:

  • SaaS is beginning to solve business complexity problems.
  • SaaS is more affordable from operating budgets whereas traditional software license plans usually require a capital budget.
  • SaaS applications deliver what people want – “People have stepped back and said ‘What is the bread-and-butter stuff I really need to get done?'” Robert DeSisto said. “The SaaS vendors have designed their software to that design point and not over-engineered it.”

This latter point has also been picked up by Phil Wainewright, who attended a SaaS vendor’s UK user conference. In his post ‘Incremental adoption sells SaaS to the enterprise‘, he reports: “Enterprise buyers go shopping for business functionality, not technology attributes”.

Another selling point (expanding on the second Gartner point above) also emerged:

“Enterprises like the fact that on-demand scales more evenly than conventional on-premises software. This means they can make a rapid start on a small scale and then roll the application out more widely on a timescale of their own choosing (or to different sets of users irrespective of how large or small each group is). In some cases this was coupled to an economic motivation, such as not having to take on additional in-house IT staff, or having less budget available this year than next, but more often it was dictated by the needs of the organization.

… An incremental approach avoids putting stress on overburdened resources and allows the application to quietly prove its worth before rolling it out to every user.”

tags: SaaS, Gartner, ASP

Permanent link to this article: http://extranetevolution.com/2006/10/saas_penetratio/

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