13
Thu, Jun
4 New Articles

Software as a Service (SaaS): Cloudy in SMBs

Analysis of News Events
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

A recent survey shows limited awareness, constrained usage.

 

Small and midsize business (SMB) executives have significant challenges in today's economy, including finding and keeping customers, controlling costs, and positioning for growth. Technology must support those objectives if they want SMB executives to pay attention.

 

According to the research firm Saugatuck Technology, which focuses on emerging enterprise technologies, Software as a Service (SaaS) refers to "software provided and used in a utility computing context, where the services provider delivers the functionality of the application or utility infrastructure software over a network, through a services interface. Typically this functionality is sold via a subscription model, or on a utility-style, "pay as you go" (PAYG), or per unit, basis." Saugatuck believes SaaS is becoming ubiquitous--and is affecting nearly all solution sectors, industries, and business and IT functions. According to IDC, SaaS software revenues doubled between 2006 and 2008, with it taking as much as 5 percent of the total software market. Gartner says that by 2012 more than two-thirds of independent software vendors will offer their applications as SaaS solutions.

 

SaaS is available for virtually all software solutions--from customer relationship management (CRM) to Web content management. Some examples of SaaS include well-known applications such as Salesforce.com for sales force automation (SFA). Other SaaS solutions in fairly widespread use include Vocus for public relations and NetSuite for CRM. In addition, the large software companies are starting to offer SaaS alternatives, including Oracle and SAP. IBM provides packaged products and services for SaaS providers. Even Microsoft, considered an opponent of SaaS, is reportedly going to announce Windows Cloud for Internet applications development. While many claim SaaS is nothing but a rehash of application service providers (ASPs), it is more than that. Unlike the ASP business model, SaaS applications are designed specifically to be accessed over the Internet.

 

Saugatuck, based in Westport, Connecticut, has been studying SaaS since 2004. The firm recently interviewed executives and technology decision-makers at companies with between 50 and 1000 employees. Most of the executives interviewed said that their businesses are dealing with ramifications of a stalled global economy, with resulting lower demand and higher prices. With this economically fragile backdrop, SMBs look at software strategies and expenditures very carefully--including SaaS. "We regularly revisit market segments to determine activity around the adoption of emerging technologies," said Bruce Guptill, Managing Director of Research at Saugatuck. "SaaS is one of the most significant disruptive technologies we see in IT today. Amongst other findings, this recent research tells us that SaaS in and of itself is not a driver for most SMBs buying technology."

 

Five significant trends emerged from the research.

  • SaaS benefits are unclear to SMB executives.
  • SMB executives do not have specific strategies for SaaS.
  • SMBs are uncertain whether SaaS can provide competitive advantage.
  • Where SMBs use SaaS is generally limited in scope.
  • Security is a concern when considering SaaS.

 

While SaaS usage is growing and is relatively widespread among SMBs worldwide, SMB executives interviewed by Saugatuck display a lack of awareness regarding what business benefits SaaS can deliver. Their view remains cloudy because of limited experience with SaaS, as well as a general disconnect in many SMBs between technology and business value. "My business advantage comes from relationships, not technology," stated one company president.

 

Strategies for adopting and using SaaS are, for the most part, non-existent among SMB technology decision-makers. In most SMBs, technology acquisition is trial and error handled on an application-by-application basis. Suite selection is rare for anything other than office-style applications (word processing, spreadsheet, presentation). 

"This is not unusual regarding any IT in smaller firms. IT in many SMBs is a tactical business resource," asserted Guptill. "SaaS in many cases is either too new to SMB executives to be on their strategy radar screens, or they do not understand (or cannot yet completely communicate) the strategic value of SaaS to other executives in the firm."

In addition, SMB executives seem unsure about any business advantages specific to SaaS.  Among those who are aware of what SaaS can do, they see it as "just another business tool." For many SMBs, there is no competitive advantage per se, because their competitors can also use SaaS. Others perceive a business advantage of SaaS because of real or imagined cost savings, and some were able to scale faster than competitors using traditional software. Business executives focus on selecting applications they need at the lowest possible overall costs. "If the solution happens to be SaaS, so be it. But SaaS in and of itself is not a driver for most SMBs buying technology," said Guptill.

 

SaaS usage among SMBs tends to be limited in scope and focus, used for one or two basic business functions, especially payroll, CRM, Human Resources (HR), and/or SFA. On the other hand, many SMB executives interviewed by Saugatuck also cited use of Web hosting, Web conference services, location-based services, and online auctions as examples of SaaS.

 

The use of SaaS in SMB-critical applications, such as core transactional systems or core financial systems of record, is mixed. Some SMBs now trust SaaS for what they consider critical to operations. Others do not, because of security concerns. However, many SMBs consider all of their applications critical. "Anything we pay for is critical," said one SMB executive.

 

Some of the executives interviewed by Saugatuck said that their firms have what amounts to an irrational fear about SaaS security. These executives know their in-house applications are not really any more secure than an externally hosted or SaaS-provided solution, yet somehow they are comfortable enough with what they already have to stick with them. In many regards, many have an attitude of "the devil we know is better than the devil we don't know." Tangentially, some SMBs worry about Internet outages and hold back from SaaS to lower that perceived risk. Others are adamant about keeping data inside the firewall and refuse to consider SaaS, although some of this may be due to specific industry mandates and regulatory reporting (e.g., pharmaceuticals).

 

Resources for investigating SaaS include these:

•·       Cloud Computing Journal

•·       IBM SaaS

•·       Oracle On Demand

•·       SaaS Blogs

•·       SAP Business ByDesign

•·       Saugatuck Technology

•·       SmoothSpan Blog

•·       ZDNet SaaS

 

"SaaS is just another way of hosting and delivering what we need," shared one SMB executive interviewed by Saugatuck. SaaS is still new to most SMBs worldwide, and therefore such attitudes are expected. SaaS' role in SMBs, while still in its nascent stages in many cases, will continue to evolve and grow if SMBs experience the promised cost and resource advantages of SaaS. 

SaaS will continue to grow in use in SMBs and elsewhere as more end users learn about its benefits and vendors deliver SaaS alternatives to their solutions. SaaS offers the ability to quickly implement applications without IT people. Plus lower initial costs often provide SMBs with an attractive alternative. However, SaaS has perceptions to overcome with regards to security and, in some cases, functionality and performance. As with all technologies, decision-makers need to weigh the pros and cons of SaaS with their requirements.

 

Ron Exler

Ron Exler is a senior product manager at Arbitron, the media ratings company. Previously, he was an independent analyst and consultant. He was formerly Vice President and Research Fellow for Robert Frances Group (RFG), a provider of advisory services for information technology (IT) executives and vendors. Mr. Exler has worked with executives from some of the world's largest enterprises, so he understands how business executives make decisions. He also writes a blog (http://www.thegeofactor.com/) and was named one of the top English-language analyst bloggers by Technobabble 2.0. Mr. Exler has had more than 125 articles and technical papers published.

 

Prior to RFG, Mr. Exler worked for several enterprise software companies, including Landmark Systems (now ASG) and Intersolv (now Serena Software). He held positions in marketing, product management, research, sales support, software development, and training. He has an M.S. from the University of Wisconsin, Madison and also earned a B.S. from Oregon State University.

BLOG COMMENTS POWERED BY DISQUS

LATEST COMMENTS

Support MC Press Online

$0.00 Raised:
$

Book Reviews

Resource Center

  • SB Profound WC 5536 Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application. You can find Part 1 here. In Part 2 of our free Node.js Webinar Series, Brian May teaches you the different tooling options available for writing code, debugging, and using Git for version control. Brian will briefly discuss the different tools available, and demonstrate his preferred setup for Node development on IBM i or any platform. Attend this webinar to learn:

  • SB Profound WP 5539More than ever, there is a demand for IT to deliver innovation. Your IBM i has been an essential part of your business operations for years. However, your organization may struggle to maintain the current system and implement new projects. The thousands of customers we've worked with and surveyed state that expectations regarding the digital footprint and vision of the company are not aligned with the current IT environment.

  • SB HelpSystems ROBOT Generic IBM announced the E1080 servers using the latest Power10 processor in September 2021. The most powerful processor from IBM to date, Power10 is designed to handle the demands of doing business in today’s high-tech atmosphere, including running cloud applications, supporting big data, and managing AI workloads. But what does Power10 mean for your data center? In this recorded webinar, IBMers Dan Sundt and Dylan Boday join IBM Power Champion Tom Huntington for a discussion on why Power10 technology is the right strategic investment if you run IBM i, AIX, or Linux. In this action-packed hour, Tom will share trends from the IBM i and AIX user communities while Dan and Dylan dive into the tech specs for key hardware, including:

  • Magic MarkTRY the one package that solves all your document design and printing challenges on all your platforms. Produce bar code labels, electronic forms, ad hoc reports, and RFID tags – without programming! MarkMagic is the only document design and print solution that combines report writing, WYSIWYG label and forms design, and conditional printing in one integrated product. Make sure your data survives when catastrophe hits. Request your trial now!  Request Now.

  • SB HelpSystems ROBOT GenericForms of ransomware has been around for over 30 years, and with more and more organizations suffering attacks each year, it continues to endure. What has made ransomware such a durable threat and what is the best way to combat it? In order to prevent ransomware, organizations must first understand how it works.

  • SB HelpSystems ROBOT GenericIT security is a top priority for businesses around the world, but most IBM i pros don’t know where to begin—and most cybersecurity experts don’t know IBM i. In this session, Robin Tatam explores the business impact of lax IBM i security, the top vulnerabilities putting IBM i at risk, and the steps you can take to protect your organization. If you’re looking to avoid unexpected downtime or corrupted data, you don’t want to miss this session.

  • SB HelpSystems ROBOT GenericCan you trust all of your users all of the time? A typical end user receives 16 malicious emails each month, but only 17 percent of these phishing campaigns are reported to IT. Once an attack is underway, most organizations won’t discover the breach until six months later. A staggering amount of damage can occur in that time. Despite these risks, 93 percent of organizations are leaving their IBM i systems vulnerable to cybercrime. In this on-demand webinar, IBM i security experts Robin Tatam and Sandi Moore will reveal:

  • FORTRA Disaster protection is vital to every business. Yet, it often consists of patched together procedures that are prone to error. From automatic backups to data encryption to media management, Robot automates the routine (yet often complex) tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:

  • FORTRAManaging messages on your IBM i can be more than a full-time job if you have to do it manually. Messages need a response and resources must be monitored—often over multiple systems and across platforms. How can you be sure you won’t miss important system events? Automate your message center with the Robot Message Management Solution. Key features include:

  • FORTRAThe thought of printing, distributing, and storing iSeries reports manually may reduce you to tears. Paper and labor costs associated with report generation can spiral out of control. Mountains of paper threaten to swamp your files. Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing. Manage your reports with the Robot Report Management Solution. Key features include:

  • FORTRAFor over 30 years, Robot has been a leader in systems management for IBM i. With batch job creation and scheduling at its core, the Robot Job Scheduling Solution reduces the opportunity for human error and helps you maintain service levels, automating even the biggest, most complex runbooks. Manage your job schedule with the Robot Job Scheduling Solution. Key features include:

  • LANSA Business users want new applications now. Market and regulatory pressures require faster application updates and delivery into production. Your IBM i developers may be approaching retirement, and you see no sure way to fill their positions with experienced developers. In addition, you may be caught between maintaining your existing applications and the uncertainty of moving to something new.

  • LANSAWhen it comes to creating your business applications, there are hundreds of coding platforms and programming languages to choose from. These options range from very complex traditional programming languages to Low-Code platforms where sometimes no traditional coding experience is needed. Download our whitepaper, The Power of Writing Code in a Low-Code Solution, and:

  • LANSASupply Chain is becoming increasingly complex and unpredictable. From raw materials for manufacturing to food supply chains, the journey from source to production to delivery to consumers is marred with inefficiencies, manual processes, shortages, recalls, counterfeits, and scandals. In this webinar, we discuss how:

  • The MC Resource Centers bring you the widest selection of white papers, trial software, and on-demand webcasts for you to choose from. >> Review the list of White Papers, Trial Software or On-Demand Webcast at the MC Press Resource Center. >> Add the items to yru Cart and complet he checkout process and submit

  • Profound Logic Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.

  • SB Profound WC 5536Join us for this hour-long webcast that will explore:

  • Fortra IT managers hoping to find new IBM i talent are discovering that the pool of experienced RPG programmers and operators or administrators with intimate knowledge of the operating system and the applications that run on it is small. This begs the question: How will you manage the platform that supports such a big part of your business? This guide offers strategies and software suggestions to help you plan IT staffing and resources and smooth the transition after your AS/400 talent retires. Read on to learn: