Economic woes push more enterprises to the cloud
Whoa, think enterprises are rushing to the cloud? Think again. It's still early days and slow going. Seventy percent have used software-as-a-service projects for less than three years, says Gartner. That's less time than consumer cloud services like Facebook and Twitter have been around or even Apple's iPhone. One-third of organizations have migration plans in place -- from on-premise to SaaS solutions. Among those enterprises already in the cloud in some way, 95 percent plan to maintain SaaS investments or increase them.
Gartner surveyed 525 organizations from nine countries -- in June and July. That may seem like old data but at the pace enterprises make IT changes, it's current; the survey might as well have been taken yesterday. :) Organizations adopting SaaS cite two major reasons: ease/speed of deployments and lower costs. Global economic crisis is a major factor driving SaaS adoption. Perhaps it's no coincidence that the US stock market collapsed three years ago last week, and the majority of enterprises started deploying SaaS solutions since.
The bottom-line usually means influence from the top. Comparing the 2008 survey to more current ones, Gartner sees a shift in decision-making from IT organizations to shared process with enterprises' business leaders. Cost-cutting is still a priority at many enterprises, while searching for ways to maximize profits from IT investments.
Still, barriers to entry hold back enterprise cloud migrations. "Although adoption trends are generally positive, SaaS is not without its challenges", Sharon Mertz, Gartner research directior, says in a statement. "More than one-third of respondents indicated issues with their SaaS deployments, citing limited integration with existing systems, network instability, and longer-than-anticipated implementation cycles as the highest-ranked challenges during deployment".
So some of the same factors preventing or slowing enterprise adoption of more traditional, client-server, on-premise solutions apply to the cloud. However, long term, as organizations move to SaaS -- where software upgrades and new capabilities can be instantly added on the back end and quickly made available to all employees -- legacy barriers will diminish.
There's another problem, and this one reflects a disconnection between business and IT leadership and vendors offering SaaS solutions. "Most respondents still indicate that no policies have been instituted to govern the evaluation and use of SaaS, suggesting that little progress has been made since the previous survey in developing governance processes", Mertz says. "The importance of governance mechanisms will continue to increase as SaaS becomes a larger element of a company's overall sourcing strategy".
Not surprisingly, SaaS deployments vary by vertical segments, of which a dozen Gartner surveyed. The segments with highest number of vertical and horizontal SaaS deployments:
- Communications: 52 percent
- Utilities: 51 percent
- Banking and securities: 49 percent
Top industries with 2012 deployment plans:
- Federal government: 33 percent
- Banking and securities: 22 percent
- Wholesale trade: 20 percent
When combining current and planned vertical and horizontal deployments (for 2012 and beyond), the top SaaS deployers are:
- Federal government: 60 percent
- Manufacturing and natural resources: 50 percent
- Wholesale trade: 49 percent
- Retail: 46 percent
"The survey illustrates how some industries lagging in past SaaS deployments are currently poised to use and consider it going forward and a remarkably strong upward trajectory with respect to the consideration of SaaS is occurring", Robert Anderson, Gartner vice president, says in a statement. "Providers seeking to target industries with horizontal and vertical-specific SaaS applications should first analyze overall trends as to current deployments, 2012 plans and other longer-term considerations to improve the timing and prioritization of their rollout strategies".
Gartner also looks at industries with vertical-specific SaaS needs. Forty-nine percent of healthcare organizations have deployed SaaS or plan to in the near future. Banking and securities (45 percent) and federal government (42 percent) follow.
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