Gartner finds lukewarm response to SaaS

The research firm's findings contradict the general impression that SaaS could help alleviate costs in the economic downturn
Written by Matthew Broersma, Contributor

Businesses are showing a lukewarm response to SaaS, despite an economic climate that would seem to encourage take-up of the technology, according to a new survey by Gartner.

The survey of 333 enterprises in the UK and the US found that organisations were, on average, "somewhat satisfied" with SaaS (software-as-as-service), while only about one-third of those surveyed planned to expand their usage of SaaS, Gartner found. The survey was carried out in December 2008 and published on Wednesday.

Gartner researchers said they were surprised at the results of the survey, given that many — including Gartner itself — have been predicting a greater uptake of such services as a result of the current tough economic conditions.

"At a time when SaaS is becoming more of a consideration for more enterprises, the results of this survey will be somewhat disquieting for SaaS vendors," said Gartner principal research analyst Twiggy Lo, in a statement.

On average, respondents ranked their experience with SaaS at 4.74 on a seven-point scale, with all 16 aspects of SaaS receiving scores in this range, Gartner said. The aspects studied included, in order of highest to lowest satisfaction: functionality for business users, provider responsiveness, reliability of performance to technical specifications, service reliability and support compliance and risk management.

Respondents who had considered using SaaS, but decided not to, said they made this choice due to high cost of service (42 percent), difficulty with integration (38 percent) and technical shortcomings (33 percent), Gartner said.

"These findings contradict the general impression that SaaS could help alleviate costs and also that it does not require much integration and technical requirements," Gartner stated.

Fifty-eight percent of organisations said they would maintain current levels of SaaS over the next two years, while 32 percent said they would expand, five percent would discontinue and five percent would decrease levels.

Gartner said SaaS providers must find ways of delivering deployments that require less technical support, and must come up with integration strategies that work better with customers' heterogeneous IT environments. "Vendors must reaffirm the fundamentals of the SaaS model — that SaaS solutions are lighter, simpler, more intuitive, more agile and more modest," Gartner stated.

The results are not completely unexpected, and are due in part to shortcomings with billing and provisioning, according to Soeren von Varchmin, vice president for SaaS at virtualisation company Parallels.

Current billing and provisioning systems used by SaaS providers create unneeded complexity for customers when they make adjustments to their services, von Varchmin said.

"End users must have 'self-service' SaaS, meaning they are free to administer their own services instead of constantly having to contact the vendor to purchase or remove applications," he said in a statement. "Without automation, SaaS is not only unprofitable for vendors but unattractive for end users, as it's difficult to realise the cost benefits."

Last month, Gartner recommended service providers to invest in SaaS as a delivery technology, as a way of cutting costs.

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