Smaller Business SaaS Still In Early Adopter Phase - InformationWeek

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10/30/2008
01:22 PM
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Smaller Business SaaS Still In Early Adopter Phase

Despite bullish predictions that the market for SaaS is ripe and small and midsize businesses are embracing subscription-based applications and IT services, the market for may still be in the early stages, which means lots of opportunity.

Despite bullish predictions that the market for SaaS is ripe and small and midsize businesses are embracing subscription-based applications and IT services, the market for may still be in the early stages, which means lots of opportunity.First there's the Gartner prediction that the global market for SaaS will exceed $6.4 billion in 2008 and double by 2012. Then we see the Microsoft Global Small Business study finding that 65% of smaller businesses are open to buying IT services on a subscription basis. And of course, the vendors aren't just flashing numbers, the announcement of SaaS and cloud computing launches from industry heavyweights such as IBM, Microsoft, and Intuit are stacking up like cordwood.

So smaller business must be in the midst of a gold rush to embrace SaaS. Not so fast! According to study from AMI-Partners focused specifically on small and midsize businesses, SaaS is gaining acceptance yet remains on the fringe: 26% of small businesses and 33% percent of medium businesses now use or plan to adopt SaaS. Moreover, despite all the noise from established enterprise vendors the SMB market remains largely open.

"Especially as some established SaaS players move upstream to focus on large and upper mid-market customers, ample opportunity remains for other vendors to innovate and add the kind of value needed to pull more SMBs into the market," said AMI-Partners VP Laurie McCabe.

Beyond the overall observations about SaaS adoption, AMI focused on how six firms are delivering improved SaaS access, affordability, and flexibility specifically to small and midsize companies. The six companies examined in the report are Boomi, Dreamfactory, LucidEra, MyBizhomepage, Zoho, and Zuora and AMI digs into the strategies they use to add value to SaaS, including:

  • Changing the economics of the SaaS equation
  • Speeding time to solution value
  • Capitalizing on ecosystems and communities
  • Facilitating the shift to service-centric economy

Go to a summary of the AMI report (PDF) "Adding Fresh Value to the SaaS Equation: Six Vendors to Watch."

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