Gartner sees positive growth for SaaS this year

The analyst says that survey respondents cited significant integration requirements and a change in sourcing strategy as the top two reasons for adopting SaaS, followed by high total cost of ownership of the conventional approaches to enterprise software purchasing. However, Gartner also finds that most companies still do not have policies governing the evaluation and use of SaaS – with only 39% of respondents indicating that such a policy or process exists, up just 1% in 2008. "SaaS applications clearly are no longer seen as a new deployment model by our survey base, with almost half of those surveyed affirming use of SaaS applications in their business for more than three years," says Sharon Mertz, research director at Gartner. "The varying levels of maturity within the user base suggest growing opportunities for service providers along the adoption curve, as organisations seek assistance with initiatives ranging from process redesign to implementation to integration services," she adds. Mertz reckons that the scope of functionality of SaaS applications has also broadened significantly in recent years – making the approach more attractive. As for popularity, the study showed email, financial management, sales force automation, customer service and expense management as the clear winners, with more than 30% of the survey base using these types of applications. As for expected investment over the next two years, survey respondents gave generally encouraging responses, with on average 53% of organisations expecting to increase investment levels slightly and 19% significantly. "Organisations are becoming more savvy when it comes to renegotiating their SaaS contracts," comments Mertz. "A key survey finding was that more organisations are renegotiating contracts for greater functionality, additional users and improved financial terms. 30% of respondents said that they had renegotiated their SaaS contracts before the end of the initial term," she concludes The survey was conducted in December 2009 and January 2010 and involved 270 IT and business management professionals from a variety of industries in North America, Europe and Asia/Pacific.