Small firms plug into software-as-a-service

Adoption rising steadily in the US, claims report

vnunet.com, 03 Mar 2008

Software-as-a-service (SaaS) adoption is rising steadily at US small and medium sized businesses, according to research published today.

Around 21 per cent of small businesses and 31 per cent of medium businesses currently use SaaS, which is double the percentage of adoption in 2004.

Access Markets International Partners said that this surge in popularity has been spurred by the need for IT resources which are easy to use, implement and maintain.

The study revealed that SaaS penetration and spending in the medium business sector is "significantly outpacing" penetration among small businesses.

Medium sized businesses spend an average of six times more on SaaS annually, and are twice as likely as small businesses to report a planned increase in SaaS spending for the next 12 months.

Businesses with 500-999 employees report the highest annual SaaS spending among all SMB size segments.

The recent growth is partly due to the number and variety of offerings from established vendors

Sau Lam Business applications and solutions analyst, AMI-Partners

However, the AMI-Partners research suggests that SaaS has yet to reach the mainstream.

"The recent growth is partly due to the number and variety of offerings from established vendors such as Microsoft, SAP, IBM, Google and Salesforce which underscores the viability of SaaS," said Sau Lam, business applications and solutions analyst at AMI-Partners.

However, several newer SaaS vendors, such as NetBooks, LongJump and Coghead, are creating offerings designed specifically for SMBs.

But more work is required to propel SaaS to the next level of growth, according to Lam.

Vendors need to intensify campaigns to educate and spark interest among SMBs that are not yet considering SaaS, and to develop and extend their offerings.

Suppliers should also build channel programmes with partners that can persuade SMBs to give SaaS a serious look.