Research firm Gartner Group has urged vendors to get back to the funadmental values of the SaaS model after finding that customers are underwhelmed by the results of their investments to date.
Gartner surveyed users and prospects of SaaS solutions in 333 enterprises in the US and the UK in December last year. The study found that while SaaS has become increasingly accepted in the mainstream, this has not automatically meant happy users and that many feel that the SaaS promise has not been realised.
Gartner found that 58% of organisations will maintain current levels of SaaS in the next two years, 32% will expand, 5% will decrease levels while 5% will discontinue altogether. At best, the results indicated that overall, organisations are "somewhat satisfied" with SaaS, with an average score 4.74 on a 7-point scale. All 16 aspects included in the survey rated similarly, including functionality for business users, provider responsiveness, reliability of performance to technical specifications, service reliability and support compliance and risk management.
“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. “Although macroeconomic factors would seem to favour SaaS providers, almost two thirds of respondents said that they planned only to maintain their current levels of SaaS in the next two years.”
The top three factors taken into account when making a decision on whether or not to deploy SaaS were meeting technical requirements at 46%, followed by security, privacy and/or confidentiality at 33% and ease of integration and functionality needed for business unit owners, 29% each. Among those who had decided not to go down the SaaS route after initially evaluating it, 42% cited high cost of service as themain inhibitor, followed by 38% who cited difficulty with integration and 33% who said the solution didn’t meet technical requirements.
Back to basics
Gartner concluded that its findings suggest that the perceived wisdom that SaaS helps alleviate costs and does not require much integration and technical requirements is not ringing true with customers. It urged vendors to focus on delivering lower TCO, facilitating easier deployments that negate the need for expensive consulting support and providing more robust integration strategies that recognise the heterogeneous environments that most customers now run and will run in the near future.
Twiggy Lo, principal research analysts at Gartner, called on the vendor community to get back to SaaS basics, namely that that SaaS solutions are lighter, simpler, more intuitive, more agile and more modest than traditional on premises deployments. “Underwhelming customer satisfaction scores, hesitation over the true cost of SaaS solutions, and concerns regarding how successfully SaaS applications can be integrated with other applications all point to issues that will need addressing and resolving,” warned Lo. “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.”
Specifically Garter urged SaaS providers to address issues related to integration of SaaS to SaaS applications, and also SaaS to on-premises applications. While SaaS vendors may be directly responsible only for their own application, what matters to customers is how that application is used in a broader context. Gartner observed that early SaaS deployments may have been relatively simple and stand-alone and have not required sophisticated integration activities but that as the scale of SaaS deployment grows, the integration bar is being raised. “It would appear from this research, SaaS providers are struggling to present convincing answers,” noted Lo.
“Most importantly, SaaS vendors must reaffirm the fundamentals of the SaaS model and assure customers and prospects that they do not intend to repeat the mistakes of previous generations of solutions that unbalance the 'win-win' at the heart of ever sustainable relationship between buyer and seller,” concluded Lo. “SaaS providers have prospered by being the alternative to traditional approaches; they have been 'part of the solution' in recent times. They must work to avoid becoming 'part of the problem'. Having pried the window open, SaaS vendors must ensure that it is not rapidly shut again."
Gartner last year predicted that SaaS would become 25% of the overall software market by 2011. The research firm forecast worldwide enterprise application SaaS revenue to reach $11.5 billion by 2011.
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