Companies Shift Gears in Their Adoption of SaaS

June, 2019

It is not unusual for technologies such as software as a service (SaaS) to have years of steadily growing adoption. However, it catches our attention when a technology as mature as SaaS takes a big leap forward.

SaaS is already the third-most adopted technology in our annual Technology Trends study, but it has now spiked in both adoption and investment. And the investment is being driven largely by companies that have already adopted some SaaS. In other words, SaaS had strong adoption in the past, but now it is accelerating.

As shown in Figure 3 from our full report, SaaS Adoption Trends and Customer Experience, 71% of companies already have some SaaS in place. And 57% of companies surveyed have the technology in place and are continuing to invest in it. Another 9% are implementing SaaS for the first time. The only technologies in the survey seeing larger rates of investment are IT security and business and data analytics.  

SaaS fig 3 - Companies Shift Gears in Their Adoption of SaaS

“Companies are accelerating their adoption of SaaS,” said Tom Dunlap, director of research for Computer Economics, an IT analyst firm based in Irvine, Calif. “Their early projects have been successful, and so now they’re increasing their investments. Very few companies are saying that they’re done with their move to the cloud. Most are stepping on the gas.”

Because customers do not always distinguish between various types of SaaS architecture, our definition of SaaS, for the purposes of this report, is broad. It includes “cloud-only” providers such as Salesforce, Concur (now part of SAP), and NetSuite (acquired by Oracle), which developed their systems from the ground up as SaaS applications. It also includes hosted versions of on-premises systems, where a service provider takes responsibility for all hosting and maintenance of the system and offers it on a subscription basis. Most companies that were giants in on-premises software are now offering hosted versions of their software if not true cloud-based apps.

However, the rapid growth of SaaS is not without some impact on parts of the IT organization outside application support. For instance, the reliance on a highly available internet connection means that IT organizations likely will need to make sustained investments in better and redundant network connectivity, especially if the SaaS application in question has low-latency requirements.

Our full report quantifies the current investment trends for SaaS and identifies the benefits driving companies to expand their implementations. It also identifies which of a wide variety of SaaS applications are driving adoption and assesses adoption and investment trends by organization size and geography. Finally, we examine the positive ROI and TCO experience of adopters and conclude with practical advice for those considering deployment of SaaS solutions.

This Research Byte is based on our report on this subject, SaaS Adoption Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).