Industry Research Featured Article
March 04, 2008
SaaS Adoption 'Rising Steadily' Among SMBs, AMI Partners Finds
Among U.S. small businesses (1-99 employees) and medium businesses (100-999 employees), SaaS (News - Alert) adoption is "rising steadily," according to the Access Markets International Partners report, 2008 U.S. Small and Medium Business Applications & Solutions Market Overview.
The report found that 21 percent and 31 percent of SBs and MBs currently use SaaS products, which is double the percentage of adoption in 2004. "Spurred by the need for easy to use, implement and maintain IT products and limited infrastructure and IT resources, and fueled by growing choice and product availability, SaaS is gaining popularity in the SMB market," the report's authors write.
According to the study, SaaS penetration and spending in the MB sector is "significantly outpacing penetration" among SBs. Across the board, MBs spend an average of six times more than SBs on SaaS annually, and are "twice as likely" as SBs to report a planned increase in SaaS spending for the next twelve months.
The largest MBs, those with up to a thousand employees, report the highest in annual SaaS spending among all SMB size segments.
But while SaaS is growing among SMBs, the report concludes "it has yet to reach the mainstream." Saul Lam, Business Applications & Solutions Analyst at AMI-Partners, attributes the recent growth in SaaS partly to "the growing number and variety of SaaS offerings both established IT vendors such as Microsoft, SAP (News - Alert), IBM, Google and Saleforce.com," which "underscores the viability of SaaS."
In addition, "a bevy of newer SaaS vendors, such as Net Books, Long jump and Cog head, are creating more products designed specifically for SMBs," the report found.
SaaS vendors need to "intensify campaigns to educate and spark interest among SMBs that are not yet considering SaaS, identify other needs that existing customers have and develop and partner to extend their offerings to increase share of wallet. In addition, they need to build channel programs with partners that can persuade SMBs that are not yet considering SaaS to give it a serious look," the study concludes.
The top three SaaS applications currently used by SBs include banking/finance, instant messaging and payroll processing, while payroll processing, banking/finance and human resources management lead in the MB segment.
A survey conducted by Aberdeen (News - Alert), a Harte-Hanks Company reported about a month ago found that only seven percent of respondents wouldn't consider purchasing CRM delivered via SaaS.
The move towards SaaS as the preferred delivery method for a CRM system is due in part by the need for organizations to find efficient ways to increase the productivity of a diverse sales force, the Aberdeen study found.
The study found that the pressure causing all organizations to focus resources on SaaS as a CRM delivery method is the need to provide access to account information anywhere to an increasingly mobile and global workforce.
What the study defined as "Best-in-Class" companies indicated that they currently blend organizational capabilities, such as the ability to provide remote access to employees (95 percent) and CRM security processes (57 percent), with technology deployment to positively affect the productivity of sales reps, while reducing the IT constraints that would accompany an on-premise product.
The study found that fully 71 percent of Best-in-Class companies integrate lead management technology with a CRM product to provide increased visibility into the sales pipeline.
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