Over at Rough Type, Nicholas Carr has got an early preview of a McKinsey report and suggests that SaaS adoption is set to explode. He says:
“The survey found that 61% of North American companies with sales over $1 billion plan to adopt one or more SaaS applications over the next year, a dramatic increase from the 38% who were planning to install SaaS apps in 2005.”
This corroborates recent reports by Gartner and IDC. Elsewhere in the November 15 issue of CIO magazine, Steve Ballmer, Kevin Turner and Andy Lees (Microsoft CEO, COO and Corp. VP respectively) were discussing SaaS in the enterprise and life beyond Vista. CIO says:
“Microsoft is currently enjoying a moment in the spotlight thanks to Vista (the latest version of Windows), the fruit of five-plus years of development and what Microsoft COO Kevin Turner calls the “biggest R&D investment in the history of Microsoft and arguably the history of business.” But Vista isn’t a part of the software-as-a-service trend, and all the pomp and circumstance around its release mask a growing concern inside the company, one that comes through in executives’ demeanor, internal communications and candid conversations about what the IT world will look like five years from now: Software as a service is a threat unlike any the company has faced before, and Microsoft must make dramatic changes if it wants to remain the most important technology company in the world.”
Gianpaolo blogged about the article and concludes:
- Regardless of what people think, Microsoft is dead serious about the SaaS trend in the consumer and the enterprise space.
- SaaS in the enterprise is a different beast than SaaS in the consumer or SMB (small and medium business) space.
- CIOs are rightfully asking themselves a lot of questions about what to do with this “SaaS thing”.
I can see this level of attention in my own experience, from the sequence of meetings we’re having with Microsoft at the moment.
And so the economics and viability of SaaS solutions in larger enterprises is coming under debate. CIO’s have seen the growth of solutions like Salesforce.com, where a sensible lightweight application and reasonable user interface have lead to significant adoption, and the rise a new challenger to the old enterprise software guard of SAP and Oracle. A new report by Forrester on the cost of SaaS versus On-Premise solutions suggests that for companies up to 499 employees, and implementations up to 100 users the economics favour SaaS. For companies with 500 to 2500 employees and implementations of 100 to 500 users, they suggest the pendulum swings towards on premise, and speculate that organisations may start with a SaaS based application, and then bring it in house at a certain point. Fellow Enterprise Irregulars Vinnie Michandani and Jason Wood add their commentary:
Of course there are still some who question whether SaaS is just an old idea with new marketing spin. In recent dialogue another Irregular, Thomas Otter of SAP, believes that SaaS is simply bureau computing from the 60s and 70s, or ASP from 5 or 6 years ago rebranded. I’ll argue the case for the differences another time, but the key thing is that these sorts of multi-tenanted, hosted (true SaaS) solutions are set to become a much bigger component of the average company’s solutions portfolio in 2007.
Technorati Tags : Enterprise+Irregulars, SaaS, McKinsey, Gartner, Forrestor, TCO, Microsoft, SME, SMB, enterprise
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