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Gartner Study Points up Dissatisfactions with SaaS
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July 14, 2009

Gartner Study Points up Dissatisfactions with SaaS

By David Sims, TMCnet Contributing Editor

No, not everybody falls in love with SaaS (News - Alert): Gartner has released a study finding that the increasingly mainstream Software as a Service underwhelms many customers: "The apparent acceptance of SaaS as a viable model has not entirely translated into satisfied users of SaaS."

Overall, organizations are "somewhat satisfied" with SaaS, giving it a tepid average score 4.74 on a 7-point scale. The survey was conducted in December 2008, which may help explain why some folks were grouchy as the economy was not, ah, rosy at the time. It looked at "users and prospects" of SaaS in 333 enterprises in the United States and the United Kingdom.

When asked to identify the top three factors that they would consider in making their decision to deploy SaaS, meeting technical requirements was the top overall consideration at 46 percent, followed by security, privacy and/or confidentiality at 33 percent and ease of integration and functionality needed for business unit owners, both at 29 percent.

“Our research findings did not exactly provide a ringing endorsement of SaaS, in fact I would go as far as to say that satisfaction levels among SaaS users are little more than lukewarm,” said Ben Pring, research vice president at Gartner (News - Alert). “Although macroeconomic factors would seem to favor SaaS providers, almost two thirds of respondents said that they planned only to maintain their current levels of SaaS in the next two years.”

While a healthy 58 percent of organizations will maintain current levels of SaaS in the next two years, Gartner found, 32 percent will expand, five percent will discontinue and five percent will decrease levels.

Those who "considered using" SaaS, but decided not to, cited high cost of service, difficulty with integration and the product not meeting technical requirements as the main reasons. As Gartner officials noted, "these findings contradict the general impression that SaaS could help alleviate costs and also that it does not require much integration and technical requirements."

“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,” says Twiggy Lo, principal research analysts at Gartner and First Coffee's new favorite principal research analyst name, adding that vendors must reaffirm the fundamentals of the SaaS model -- that SaaS solutions are "lighter, simpler, more intuitive, more agile and more modest."

The report, “Dataquest Insight: SaaS Adoption Trends in the U.S and the U.K.," is available on Gartner’s Web site.

Last week TMC had the news that Gartner ranked SaaS vendor NetSuite (News - Alert) "the fastest growing Financial Management System vendor in North America among the top 10 vendors. "Despite the tough economic environment, and modest growth in the overall ERP market of 3.4 percent, NetSuite posted 41.1 percent growth in 2008 -- its performance sharply contrasting with the results of the traditional on-premise vendors," the news stated.

David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Jessica Kostek

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