CIOZone.com - Professional Network for CIOs and IT Professionals

The results of a new Software as a Service study by Gartner might not give a complete picture of market sentiments towards using SaaS, but it is revealing.

According to a survey of 333 SaaS customers and prospective users in the U.S. and U.K. released by Gartner last week, many customers say they’re “underwhelmed” by their experiences so far. In addition, nearly two-thirds of the respondents said they plan to maintain their current levels of SaaS engagements over the next two years. The study was conducted in December 2008, so the findings are a bit dated.

Nonetheless, the results are sobering and likely viewed as good news by traditional enterprise software vendors such as Oracle and SAP who are tip-toeing into the on-demand software market and have the most to lose with the high profit margins associated with premise-based software licenses and maintenance agreements.

The most disturbing thing about the Gartner survey results was that some of the very areas that SaaS providers have promoted to entice would-be customers – namely lower costs and ease of integration – rated rather poorly among survey respondents. Forty-two percent of respondents who had considered using SaaS but decided not to pointed to the high costs associated with the services. Meanwhile, 38%  pointed to difficulties with integration while a third of the respondents said the services didn’t meet their technical requirements.

There can be unexpected costs associated with SaaS that prospective customers need to be wary of, such as training and add-on storage and integration costs as cited in a special report on SaaS published by CIOZone.com in May. Still, SaaS has been widely heralded to offer would-be customers significant cost savings compared to premise-based licensing agreements. And while that may be the case for some customers, the Gartner study casts a shadow over an emerging market that’s otherwise picking up strength as enterprise IT shops look for ways to reduce their IT footprints, pare their costs and simplify their operations.

Comments (1)

	1. 07-13-2009 17:01
	This survey seems to fly in the face of recent financial results posted by the major SaaS vendors. Gartner indicates respondents pointed to the high costs associated with SaaS. I'm wondering if those high costs were for companies thinking of switching from installed bases as opposed to those looking at new deployments. Registered

Mel Duvall

Only registered users can write comments.
Please login or register.