More than 95% of respondents expect to maintain or grow use of SaaS

More than 95 percent of organizations expect to maintain
or increase their investments in software as a service (SaaS) and more than
one-third have migration projects under way from on-premises to SaaS, according
to a survey by Gartner.

Gartner surveyed 525 organizations
in nine countries spanning 12 vertical industries to understand their usage
patterns and key trends for SaaS in the enterprise.

Respondents cited ease and speed of deployment and
cost-effectiveness as the top two reasons for adoption. Leading uses of SaaS
were either replacements for on-premises applications or net-new SaaS
solutions,” said Sharon Mertz, research director at Gartner.

This represents a shift from previous Gartner surveys
where more respondents indicated SaaS was being used as an extension to an
existing on-premises application,” Mertz added.

Nearly 70 percent of organizations have used SaaS for
less than three years, also indicating a continuing stream of net-new users for
this deployment model.

More enterprises are renegotiating contracts early not
only to satisfy demands for more functionality and an expanding user base, but
also to take advantage of improved financial terms as downward pricing
pressures continue in the wake of economic turbulence and increasing vendor

Although adoption trends are generally positive, SaaS is
not without its challenges. More than one-third of respondents indicated issues
with their SaaS deployments, citing limited integration with existing systems,
network instability, and longer-than-anticipated implementation cycles as the
highest-ranked challenges during deployment.

In addition, most respondents still indicate that no
policies have been instituted to govern the evaluation and use of SaaS,
suggesting that little progress has been made since the previous survey in
developing governance processes. The importance of governance mechanisms will
continue to increase as SaaS becomes a larger element of a company’s overall
sourcing strategy.

A comparison of Gartner SaaS user-survey results from
2008 and 2010 indicate that the percentage of decisions made at the executive
level is increasing. The latest survey results show that the decision process
is shifting to a joint decision between the business and IT.


Analysts found that deployments of both horizontal and
vertical-specific SaaS solutions (VSS) vary greatly by industry, as do planned
deployments for 2012 and those considered beyond. Many industries that have not
pursued SaaS in the past are beginning to do so.

Currently, communications (52 percent), utilities (51
percent), and banking and securities (49 percent) industries rank highest with
respect to SaaS deployed across the horizontal and vertical-specific categories
sampled. In 2012, those industries ranking highest with respect to their plans
to use SaaS include federal government (33 percent), banking and securities (22
percent) and wholesale trade (20 percent). Beyond 2012, top industries
considering SaaS are manufacturing and natural resources (37 percent),
wholesale trade and retail (each 29 percent).

When respondents’ 2012 deployment plans are combined with
those considering SaaS beyond the coming year, federal government ranked
highest (60 percent), followed by manufacturing and natural resources (50
percent), wholesale trade (49 percent) and retail (46 percent).

By Team
[email protected]


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