ERP suppliers are slow to adopt SaaS, says Gartner

Just about everybody is agreed that software-as-a-service (SaaS) is being adopted quickly but, according to the analysts Gartner, some are decidedly quicker than others.

In a survey conducted recently, Gartner looked at three European countries, the UK, Germany and France and looked at different applications running SaaS, including CRM and ERP which, appears to have made little headway in the field.

The survey found that companies in France and the UK "are significantly ahead of those in Germany in terms of SaaS adoption", Gartner said in a statement. However, Gartner also said that the responses from German organisations suggested "that the difference in adoption levels will shrink if users follow through on their plans for SaaS adoption in 2009".

In terms of the number of companies using SaaS, 71 percent of those surveyed said that their organisations were currently using SaaS applications. The level in the UK was only slight below at 68 percent. Only 45 percent in Germany said they were using software.

The survey also looked at actual levels of SaaS use compared with the number of employees an organisation could have using SaaS. The results showed that higher levels of usage and adoption were in France.

The survey findings on the length of time that SaaS applications have been in use across the three countries showed that France has a slight lead in terms of adoption. Only 4 per cent of French respondents said that they had used SaaS applications for less than a year, compared with 17 per cent in the UK and 21 per cent in Germany.

Gartner said that it has been "a traditional assumption" that the UK is more advanced in the adoption of SaaS than France and Germany and so it was revealing that this metric showed that the opposite was true, said Gartner.

“We believe that North American vendors have enjoyed greater success in the UK because less effort is required to localise products and sales and marketing strategies,” said Chris Pang, research analyst at Gartner.

The companies that have been most successful in driving through adoption of SaaS are Salesforce.com and RightNow Technology, Pang said. "They typify the reason why companies are able to success in SaaS," said Pang. "The most successful applications are easy to deploy and to deploy many times with more or less the same software."

For the same reason, ERP vendors have struggled to be successful in SaaS, said Pang. "They run very complex applications with lots of different parts of the software that need a lot of changes and adapting before you will get the software to run in quantity," Pang told ZDNet UK.

"Look at an application like WebEx, there is not a lot of customisation required so it has been a success," said Pang.

SUPPLEMENT ON ERP AND IDC: On Wednesday (the say after writing the blog) this came in from IDC:

"A recent IDC survey in Western Europe shows that 2009 spending on ERP applications will be strongly impacted by the current economic crisis. 21 percent of all respondents said their ERP spend would be lower or much lower in 2009 than in 2008. France will be particularly hard hit, but the Nordics and Germany will feel less of an impact. A closer look at ERP spending plans also shows that larger enterprises with more than 2,500 employees will be most vulnerable to ERP spending cutbacks.

"On a more positive note, respondents hinted at increased average spending in 2009 for all other software categories, including security software, storage software, databases, systems management, and systems software. This confirms IDC's view that infrastructure software spend will be the most resilient to macroeconomic fluctuations. There are also clear indications that CRM applications will see increased spending in 2009.

"IT cost reduction was the most popular IT priority for 2009, selected by 23 percent of all respondents. However, this implies that 77 percent of all respondents had other IT priorities besides cost, including IT security, support of new business requirements, IT infrastructure consolidation, and business applications, each of which were selected by at least 10 percent of all respondents."