SaaS Adoption Accelerates, Goes Global in the Enterprise

November 2, 2012

In working with manufacturers and financial services firms over the last year, one point is becoming very clear: SaaS is gaining trust as a solid alternative for global deployments across the enterprise. And this trend has been accelerating in the last six months. One case in point is a 4,000 seat SaaS CRM deployment going live in Australia, Europe, and the U.S. by December of this year.

What’s noteworthy about this shift is that just eighteen months ago an Australian-based manufacturer was only considering SaaS for on-premises enhancement of their CRM system. What changed? The European and U.S. distribution and sales offices were on nearly 40 different CRM, quoting, proposal and pricing systems. It was nearly impossible to track global opportunities.

Meanwhile business was booming in Australia and there were up-sell and cross-sell opportunities being missed in the U.S. and European-based headquarters of their prospects. The manufacturer chose to move to a global SaaS CRM solution quickly. Uniting all three divisions with a global sales strategy forced the consolidation of 40 different quoting, pricing and CRM systems in the U.S. alone. What they lost in complexity they are looking to pick up in global customer sales.

Measuring Where SaaS Is Cannibalizing On-Premise Enterprise Applications

Gartner’s Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications published: 29 October 2012 breaks out the percent of SaaS revenue for ten different enterprise application categories. The greener the color the greater the adoption. As was seen with the Australian manufacturer, CRM continues dominate this trend of SaaS cannibalizing on-premise enterprise applications.

Additional take-aways from this report include the following:

  • Perceived lower Total Cost of Ownership (TCO) continues to be the dominant reason enterprises are considering SaaS adoption, with 50% of respondents in 2012 mentioning this as the primary factor in their decision.
  • CRM is leading all other enterprise application areas in net new deployments according to the Gartner study, with the majority of on-premise replacements being in North America and Europe.
  • Gartner projects that by 2016 more than 50% of CRM software revenue will be delivered by SaaS. As of 2011, 35% of CRM software was delivered on the SaaS platform. Gartner expects to see SaaS-based CRM grow at three time the rate of on-premise applications.
  • 95% of Web analytics functions are delivered via the SaaS model whereas only 40% of sales use cloud today according to the findings of this study.
  • The highest adoption rates of SaaS-based applications include sales, customer service, social CRM and marketing automation.
  • SaaS-based ERP will continued to be a small percentage of the total market, attaining 10% cannibalization by 2012. Forrester has consistently said this is 13%, growing to 16% by 2015.
  • Office suites and digital content creation (DCC) will attain compound annual growth rates (CAGR) of 40.7% and a 32.2% respectively from 2011 through 2016. Gartner is making the assumption consumers and small businesses will continue be the major forces for Web-based office suites through 2013.
  • The four reasons why companies don’t choose SaaS include uncertainty if it is the right deployment option (36%), satisfaction with existing on-premise applications (30%), no further requirements (33%) and locked into their current solution with expensive contractual requirements (14%).

Bottom Line: Enterprises and their need to compete with greater accuracy and speed are driving the cannibalization of on-premise applications faster than many anticipated; enterprise software vendors need to step up and get in front of this if they are going to retain their greatest sources of revenue.

Source: Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications Published: 29 October 2012 written by Chad Eschinger, Joanne M. Correia, Yanna Dharmasthira, Tom Eid, Chris Pang, Dan Sommer, Hai Hong Swinehart and Laurie F. Wurster


Choosing a cloud provider

September 16, 2011

There is a significant amount of attention being paid to computing “in the cloud”, with many organisations now offering this type of service. The volume of noise surround cloud computing has seen a number of usually risk averse business sectors now looking seriously at using the
internet and cloud providers for the delivery of critical business applications. However there are also a number of horror stories emerging about companies having 24 and 36 hour service outages because their providers’ cannot cope with the demand put on them.

The main issue, like all things in life, is not all solutions are equal. And the even stranger thing is that most organisations take the cheapest option available for their most mission critical IT infrastructure. As a provider of cloud based solutions we work with some of the UK’s leading companies most of the time after they have been burnt because they initially didn’t do their due diligence on their initial suppliers.

The market is certainly saturated at present with most IT companies now offering a cloud service of one type or another. The challenge is that usually it is not their primary activity and the investment, both in terms of people and infrastructure is done when they win a piece of business. It is really important that quality, ability, history, knowledge, pricing and relationships be looked into before you enter into a business relationship.

When we ‘pitch’ for a piece of work the other companies have their own way of operating and usually the hosting part of their business is relatively small. This has its advantage and disadvantages as usually the solutions they offer are cheaper and so sometimes usually more attractive especially if the client is price sensitive. This approach has in the long run the potential to be more expensive as the client usually sees their solution running on substandard hardware with the communication technology running without failover or backup leaving them open to significant downtime.

There are a number of factors that we have discovered over time that clients should consider before that look to outsource:

1)      The business needs to financially sound which in the current climate is easier said than done. A significant proportion of IT operations rely on monthly sales just to keep the lights on. A number of disastrous sales months and the company could have cash flow issues.

2)     What experience do they have in and around the delivery at speed of business applications? Is there investment in the training for their staff and do they or are they striving to achieve ISO27001 accreditation.  Is there a ‘passion’ in the business for hosting and application delivery is this in their DNA.

3)     Data security is imperative, not only in terms of backups and storage but also in terms of who has access the data and do they abide by the data protection act. Is there a standard anti-spam and anti-virus solution that they offer and do they work closely with the vendor in case of support. It is important to look at the data-centre, we have a significant foot print in a tier IV which is the best quality available, however there are some very good tier III. The hosting centre visit is extremely important, looking at the not only the data security but the physical building security and guards.

4)     What level of customer support is there,24/7/365 is this telephone based or is there on premise support. Is there anetwork operations centre that is constantly looking at any network issues? What service level agreements are in place, this is to include network, communications and support to resolution. Does the provider have vendor relationships and can they supply vendor care packs and ticket support. Is the infrastructure future proofed and is there room for expansion.

5)     Do they have experience in the delivery of applications at speed over comms lines? This is important as latency is critical with user experience if it gets too high then the application is virtually un-usable. If we experience these issues we have access to application acceleration technology and more recently solid state IO solutions that enable you to operate databases in RAM overcoming latency and increasing the speed of the application. Each application has different needs and we have a depth of knowledge when it comes to the delivery of, ERP, Email, Office
Applications, Practice Management Systems, Finance applications, EPOS and many more.

6)     Sometimes clients overlook the fact that they will be working with the supplier potentially for many years. The million dollar question is can you work with them, do you like them and can you trust them. It is a massive decision and so all things being equal who would you prefer to work alongside whom would you put your job on?

7)      Does the company understand and offer different pricing models, do they have flexible licencing models and can they offer the solution as an op-ex rather than a cap-ex. True cloud providers are in line with major vendors and offer costs per user per month models. This type of pricing allows you to understand the true cost of IT of over the length of the contract and the Finance Director is able to project accurately future costs.

The above are seven areas that we would suggest you look into when engaging with a cloud provider. There are numerous others but these are some of the most important. If on reading this you would like to speak to C24 and understand how we are delivering value to our client base please do not hesitate to call us to talk through your requirements.


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