Small Businesses More Aggressive in Adopting SAAS, Report Finds

A report by Saugatuck Technology finds that while 57 percent of enterprises plan on integrating some form of SAAS within the next two years, SMBs are being more aggressive about their rates of SAAS adoption, as the economy forces companies of all sizes to cut IT infrastructure costs by any means necessary. While SAAS has found some traction within the enterprise, some IT administrators and procurers are still ambivalent about the concept.

A recent research report by Saugatuck Technology suggests that 57 percent of large enterprises plan on integrating some form of software as a service within the next two years, but are more likely to adopt SAAS point solutions than an entire SAAS infrastructure.

Furthermore, the report found that small and midsize businesses were more likely to adopt SAAS, with about 40 percent of those surveyed utilizing some aspect of SAAS by the end of 2008. Around 37 percent of large enterprises surveyed had begun integrating SAAS into their core business-application infrastructure.

Based on rates of current and planned deployment, Saugatuck Technology predicted that over the next two years the rate of SAAS adoption for SMBs and the enterprise would rise to 65 percent and 57 percent respectively. Previous surveys by the company had similarly shown a somewhat more aggressive rate of adoption by SMBs than by the enterprise.

Economic pressure to cut costs felt by companies of all sizes could be leading to the SAAS adoption trend.

"Large companies want to eliminate expensive and redundant internal costs, while still achieving compliance with confidence, just as much as small and medium businesses," Pam Kostka, senior vice president of corporate marketing for Sabrix, which provides transaction tax management for corporations, said in a statement. Sabrix has seen rates of adoption for its on-demand tax platform increase for both SMB and enterprise clients, she said.

While other recent reports have likewise shown enterprises either keeping or expanding SAAS offerings, a certain percentage of businesses also show a degree of ambivalence toward the concept. A July survey by research company Gartner found that 58 percent of 333 organizations surveyed in the United States and the United Kingdom planned on maintaining their current level of SAAS applications, while 32 percent planned to expand their offerings and 10 percent indicated plans to either discontinue or scale down SAAS use.

In that Gartner survey, U.S. and UK organizations rated overall satisfaction with SAAS as 4.74 on a seven-point scale; those ratings where based on 16 metrics, including service reliability and risk management.

The Gartner report found that SAAS vendors, if they want their products to penetrate more deeply within the enterprise, "must focus on truly delivering lower TCO, facilitating easier deployments that negate the need for expensive consulting support and providing more robust integration strategies."