Why Are SMBs Wary Of SaaS? - InformationWeek

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Cloud // Software as a Service

Why Are SMBs Wary Of SaaS?

Lack of awareness and uncertainty about managing multiple apps are the culprits according to AppDirect co-CEO Daniel Sakes, whose firm provides an online marketplace for vertical apps.

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SMBs account for less than 10% of SaaS usage, according to IDC. Microsoft cites a similar number. With so many companies riding the cloud these days, why are small and midsize businesses so reluctant to make the leap?

Daniel Sakes, co-CEO of AppDirect, thinks he knows why. "Many of these companies don't even know that SaaS apps exist or that they're relevant to their business," he said in an interview. "And those who use SaaS aren't sure how to manage multiple apps."

AppDirect offers a solution that Saks believes is going to "revolutionize the way businesses interact with their applications." The company recently joined the ranks of LinkedIn and Flickr when it won "Best in Show" at this year's Under the Radar conference, which recognizes disruptive players with innovative emerging technologies.

Businesses in any vertical can visit AppDirect's online marketplace to find, buy, and manage applications. Are you a hair salon looking for a Web-based POS program? A law firm seeking a cost-efficient financial management app? You'll probably find it at AppDirect.

The website provides a central point of access for all applications. Companies can do a little "window-shopping" to check out the features, benefits, and pricing of apps before committing to a subscription. They can provision and de-provision users with a few clicks of the mouse; do online invoicing; set up user roles and privileges; and manage multiple subscriptions--all in one place, and all without paper.

Saks said about 80% of AppDirect's customers are smaller businesses (companies with 5 to 100 employees), but the company does draw quite a few Fortune 500 players as well.

AppDirect is just emerging from private beta, and Saks said the company is working hard to recruit channel players--telecom companies, hardware and software vendors, and any other B2B service provider that would offer SaaS to its client base. "Reselling SaaS is difficult, just the way it was for mobile providers to sell apps before the iPhone," Saks said. "We're addressing the pain points."

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