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Andre Yee

Gartner Survey Issues SaaS Reality Check

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Recently, Gartner conducted a survey of 333 enterprises. It yielded interesting results from the respondents on their consideration of Saas applications -

Overall respondents registered a satisfaction score of only 4.7 out of 7.0 scale...which isn't particularly indicative of happy users. Also, of respondents that chose NOT to use SaaS, the reasons were the following -

42% due to high cost of service
38% due to integration
33% due technical shortcomings

Gartner considers these results inconsistent with the SaaS promise of lower cost and the benefit of not requiring much in terms integration and technical deployment expertise.

Are you surprised by these results? I'm not. In great part, it's because there are prevailing misconceptions about SaaS - it's time for a reality check.

Myth #1 - SaaS is all about lower TCO. This may or may not be true depending on the SaaS company but make no mistake about it - cost savings isn't and shouldn't the prime driver. The chief benefit for SaaS is not primarily about cost, it's about faster deployments and shorter time to value. If that's not compelling to some IT managers, then they don't understand opportunity costs and the time value of money.

Myth #2 - all SaaS companies are created equal. No one would ever admit such a statement, yet ironically, most reports on SaaS fail to delineate between newcomers that have flooded the space with established SaaS companies who have cracked the code on scale, availability and integration. Clearly, not all SaaS companies are created equal - scaling to a billion transactions/day or 99.99% uptime simply doesn't happen overnight.

Myth #3 - Time to Deployment = Time to Value. This is one of the biggest prevailing myths. With on premise enterprise software, even after installation and deployment to end users, you still need to contend with training and business process alignment. Why do we expect any different with SaaS? Folks, the "S" in SaaS is still for software which means we still need user training and best practices. We still need to align application use with business processes. And, sometimes, it may even mean re-factoring ineffective business processes as well. There is a "hidden cost" - training, best practices, knowledge management and a myriad of other ancillary expenses that figure into every enterprise application. Anyone who tells you otherwise is just lying to you, intentionally or otherwise.

That's not to say SaaS doesn't have substantial advantages as a delivery model. It typically provides much faster deployment than an on-premise application. It also offers less ongoing management costs. And, if you go with a reputable, established SaaS vendor, you should expect superior security and scale than you could achieve with an on-premise solution.



1 Comment

Truthful words. I like to hear someone who has analytic thinking and own opinion. Good article. Thank you.

Andre Yee blogs about cloud computing, SaaS, Web 2.0 and other emerging technologies that matter to businesses.

Andre Yee

Andre Yee is an entrepreneur and technologist with nearly 20 years of experience in the business of technology.

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