March 12, 2008

Competing In The Fast-Growing SaaS Market

by Liz Herbert

with Eric G. Brown, Sean Galvin

Executive Summary (This is a document excerpt)

Software-as-a-service (SaaS) continues its fast-paced growth as buyers seek shorter deployment times, faster ROI, and pay-as-you-go pricing. In a recent survey of 1,017 technology decision-makers, Forrester found that adoption in large enterprises is now at 16%, up 33% from the previous year's 12%. North American companies are the heaviest users of SaaS with approximately double the utilization rate of European firms. SaaS usage also varies by application, with HR, collaboration, and customer relationship management (CRM) showing the highest adoption rates, and enterprise resource planning (ERP) and supply chain showing lower adoption rates. The study also shows that the industry still faces barriers to adoption — including concerns around integration, customization, security, and total cost of ownership — that SaaS vendors must address in order to be successful in this hot market.

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