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Jul 10 2008

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SaaS raising enterprise expectations

Two core realities will shape Software-as-a-Service (SaaS) markets for years to come, says the latest research report (Enterprise Ready, or Not – SaaS Enters the Mainstream, costing US$1,295) from Saugatuck Technology. Saugatuck say SaaS is expanding well beyond its early low-cost, easy-to-deploy niche application roots (CRM, sales force automation and collaboration) to become a key business computing force, and one that needs to be fully integrated with wider enterprise systems:

  • Users want SaaS throughout the enterprise, whether their enterprises are ready for it or not
  • SaaS is spreading throughout the enterprise, whether the vendors – or their offerings – are ready to support and deliver what users want, or not.

According to an email forwarded to me (see also Saugatuck’s news release), the report’s key findings include:

  • SaaS continues to grow in successive waves of evolution and adoption, and its complexity and capabilities are accelerating [Saugatuck warns of “SaaS bloat” – haphazard growth and spread of increasingly-complex SaaS throughout the enterprise]. Business and technology tides are combining and could “sweep IT and business up, together and forward in ways not previously experienced”.
  • Continuous growth and innovation are core competitive requirements in most SaaS markets – especially the ability to develop and deliver frequent updates and new releases. “But there is no guarantee that even the most powerful ISVs can and will make successful transitions to SaaS,” meaning “a possible ‘changing of the guard’ when it comes to software and infrastructure providers”.
  • User acceptance of SaaS will progress to growing expectations of ever-increasing SaaS capabilities, a demand for interoperability with on-premise systems, and an expectation of customisable and more unified and integrative platforms [presumably, this will challenge SaaS vendors’ tendency towards supporting multiple customers on a single instance of their code – although many have extensive configuration capabilities].
  • As the use (and value) of SaaS grows within user enterprises, so does the need for management. Hence, SaaS providers are driven to develop and deliver ever-more-sophisticated platform, integration and management offerings. Providers are therefore expanding and improving SaaS offerings to meet and exceed user desire and demand, as well as to establish and extend their competitive advantages.
  • “‘Cloud Computing’ becomes – in a very short time – ‘Cloud Business’. It is the natural progression of SaaS, the IT utility concept, and business process outsourcing and transformation.”

Permanent link to this article: http://extranetevolution.com/2008/07/saas-raising-enterprise-expectations/

3 comments

  1. Kendra

    And not only do users *want* saas throughout the enterprise, like you said, many are already using enterprise saas – the decision is going to be on the enterprise whether they engage in what’s going on there or not…
    Nice article – i like how you used the term ‘cloud business’.
    Take good care,
    Kendra @ box.net

  2. Dean J. Garrett

    A definite trend is the new SaaS entries coming from smaller, albeit fresh minded, startups. A good example is the business software template approach for on demand applications from http://www.HostedDatabase.com

  3. Landon Hoover

    Concerning the second and third key findings, I think there are solutions that can help SaaS providers achieve “continuous growth and innovation” and meet the “growing expectations” of customers. One such solution is usage metering; there are several companies in the space of advanced SaaS analytics or usage metering. These solutions help SaaS companies understand how their customers are utilizing their software; more specifically, what features they use most frequently, which features customers want improved, how the offerings should be contracted or expanded to exclude or include features. With this increased knowledge, the SaaS provider can focus its resources towards improving their solution in the way the customer desires; improving the software in a way that ensures “continuous growth and innovation” and meets the “growing expectations” of customers.
    Many of the companies that offer usage tracking solutions, also offer other solutions that ease SaaS providers business model. For example, eVapt is a SaaS metering company; eVapt also provides billing mediation (which eases the complicated pay-for-use SaaS model), contract management, and product cataloging/bundling. There are many companies like eVapt that help SaaS companies monetize their ideas and ensure SaaS success!

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