February 7, 2008

SMB SaaS Adoption: Road Bumps Ahead In 2008

SaaS Marketers Will Face A Skeptical Early Majority

by Michael Speyer

with Eric G. Brown, Emily Van Metre

Executive Summary (This is a document excerpt)

Software-as-a-service (SaaS) adoption by small and medium-size businesses (SMBs) increased by 58% to 15% from 2006 to 2007 as the market's early adopters flocked to the SaaS siren song of lower costs, quick deployment times, and mitigating IT staff constraints. But during that same period, non-users' skepticism widened, with increasing concerns about total cost of ownership (TCO), integration, security, and application performance. To ensure that SMB SaaS adoption glides smoothly into the early majority phase, marketers will need to address skeptics' concerns head-on. Marketers will need to clearly demonstrate the TCO advantages of SaaS, ensure that their products have well-defined data integration and conversion procedures, show price transparency, and have well-articulated security and data protection stories.

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