Software-as-a-Service deployment ramps up

Ninety-five percent of Gartner survey responsdents using or increasing use of SaaS

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Software-as-a-Service deployment ramps up SaaS deployment is on the rise.
By  Mark Sutton Published  October 3, 2011

Ninety-five percent of organisations are increasing or maintaining their use of software-as-a-Service (SaaS), according to a new survey by Gartner.

The survey, which samples 525 organisations across 12 vertical sectors and nine countries, found that SaaS was on the uptake as companies look to extend existing agreements and deploy new applications to cut costs.

Of the survey respondents, 70% have been using SaaS for less than three years, but many existing users are renegotiating contracts early, to get better financial terms and meet growing demand for functionality and expanding users bases.

"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.

"Although adoption trends are generally positive, SaaS is not without its challenges," Mertz added. "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," she said.

Current adoption of vertical and horizontal focused SaaS is highest in communications (52%), utilities (51%) and banking and securities showing the highest levels of current adoption across verticals, while for those planning to deploy SaaS from 2012 and beyond, federal government (60%), manufacturing and natural resources (50%), wholesale trade (49%) and retail (46%), ranked highest.

In vertical-specific solutions (VSS), healthcare (49%), banking and securities (45%) and federal government (42%) have the highest current levels of VSS SaaS adoption.

"The survey illustrates how some industries lagging in past SaaS deployments are currently poised to use and consider it going forward and a remarkably strong upward trajectory with respect to the consideration of SaaS is occurring," said Robert Anderson, research vice president at Gartner. "Providers seeking to target industries with horizontal and vertical-specific SaaS applications should first analyze overall trends as to current deployments, 2012 plans and other longer-term considerations to improve the timing and prioritization of their rollout strategies.

"There are significant variations of VSS SaaS deployed both across and within industries surveyed. Many that have delayed consideration of SaaS for VSS until now, such as federal government and banking and securities, plan to use it in the future,". Anderson said. "Providers planning to target VSS SaaS opportunities should analyze current and planned future deployments across and within industries, as experience and interest levels vary and are shifting rapidly."

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