Companies of all sizes are picking up their adoption of SaaS (software as a service), with email, calendaring and human resources applications garnering the most interest, according to a new survey from Constellation Research.
Email and calendaring is the most popular choice for SaaS among the survey respondents, with 37 percent saying such products are on their radar, wrote Constellation vice president and principal analyst Frank Scavo.
“Most IT decision makers have had personal experience with personal webmail or Web calendaring applications, such as Google Calendar,” Scavo wrote. “It is not surprising, then, to see these personal productivity applications leading the list of SaaS investment plans.”
Human resources applications is the next most popular SaaS category, with 32 percent saying they’ll invest in it. Such applications “often include access by widely dispersed employee populations, making them a good candidate for SaaS deployment,” Scavo wrote.
HR is closely followed by CRM (customer relationship management) and collaboration applications, with 31 percent of respondents denoting both areas as investment priorities.
Some 25 percent of respondents indicated interest in SaaS ERP (enterprise resource planning) applications. “Although ERP and accounting systems are the most widely implemented category of business applications generally, they fall farther down in terms of popularity for SaaS deployment,” likely due to their “more entrenched nature and more comprehensive scope,” Scavo wrote.
Respondents placed significantly less priority on some other application areas. For example, only 11 percent expressed interest in SaaS for expense reporting. The atomization of SaaS buyers’ interests is also reflected in that 24 percent checked off “other” as a product category.
Overall, SaaS uptake is growing because its benefits “are clear,” Scavo wrote.
Respondents named speed of implementation as the top benefit, followed by reduced IT infrastructure, scalability and easier upgrades, according to the report.
However, they ranked high availability/disaster recovery and lower costs as less important when it comes to SaaS, the report adds. “Traditional software vendors argue that long term, on-premises licensed software often costs less than SaaS applications,” Scavo wrote. “IT decision makers may believe this argument.”
Nor did subscription pricing, a hallmark of SaaS, rank particularly high on respondents’ list of benefits. There may be a reason for this as well, according to Scavo.
Cloud vendors “argue that subscription pricing also turns software from a capital expenditure to an operating expense, which for some companies provides a more favorable tax treatment,” he wrote. “However, vendors of traditional on-premises software also can easily provide the same benefit, turning a capital investment into an operating expense by financing the software license purchase as an operating lease.”
Respondents also listed their concerns with SaaS, with data privacy risks coming in highest, followed by security, loss of control, integration challenges and performance.
The survey found that SaaS grew overall in 2012, with 49 percent of organizations having systems in place compared to 47 percent in 2011.
Expect this trend to continue, Scavo wrote.”We believe that within the next five years, new SaaS application sales will exceed new on-premises application sales,” he added.
The study was based on information collected by Computer Economics, a research firm where Scavo serves as president. Computer Economics surveyed some 244 companies from around the world between July and September 2012. The companies’ average yearly revenue was $2.1 billion, while the median was $287 million, according to the study.