The research (conducted by Gartner in 8 countries across Europe, North America and Asia/Pacific) shows that SaaS is becoming more mainstream as approximately 60% of all current users of SaaS have been using SaaS for more than 2 years. Indicating that SaaS “projects are moving beyond a pilot stage to becoming a part of the enterprise application landscape” (Source: User Survey Analysis: Software as a Service, Enterprise Application Markets, Worldwide, 2008).
The research confirms that the cost prohibitive nature of on-premise solutions as the main driver for adopting a SaaS solution, this is particularly relevant given the current economic climate. Another key reason for adopting SaaS over on-premise is that it is seen as easier and/or faster to deploy. Given these motivations, is there potential for SaaS to completely replace the on-premise model in the years to come?
Furthermore, when asked about their future plans for SaaS within their business, most current users of SaaS applications believe they will either maintain, or increase their current SaaS usage levels. “In comparing current with future new investments, 66% of respondents believe SaaS investments will increase, while (only) 48% hold the same notion about on-premises budgets. Most new spending associated with SaaS is expected to be earmarked to further extend the functionality of an existing on-premises application.” (Source: User Survey Analysis: Software as a Service, Enterprise Application Markets, Worldwide, 2008).
These findings are further supported by THINKstrategies’ research (conducted in conjunction with Cutter Consortium), which “has found that a growing number of businesses are adopting SaaS alternatives to traditional legacy applications. In 2008, we saw the proportion of companies using SaaS nearly double from the year before, jumping from 32% in 2007 to 62% in 2008. Well over 90% of SaaS users were satisfied with the SaaS applications they had adopted, planned to renew and expand their SaaS subscriptions, and would recommend SaaS to their peers.” (Source: www.qlikview.com)
An IDC press release estimates that the industry will grow by 40% in 2009 and expects that by 2010 76% of US organizations will have at least one SaaS application.
We certainly have seen similar growth across our own corporate customer base with all of our customers preferring our SaaS offering rather than on-premise. They re-affirm cost effectiveness, speed of delivery and flexibility as the main drivers behind this choice. In the current economic environment, the SaaS application model really makes sense.
The question then becomes not ‘Can SaaS Completely Replace On-Premise?’ but rather “When Will SaaS Completely Replace On-Premise?”