Gartner Says SaaS is Taking Off!

December 12, 2008 Appirio

Balakrishna Narasimhan

Gartner recently released a survey saying that the majority of enterprises expect to increase their use of SaaS in the coming months and years. We’ve been seeing this for a while in the customers we work with, but it’s great to get external confirmation that this is a broad trend.

The Stats – Accelerating Adoption

According to Gartner, 90%+ of enterprises expect to maintain or increase their investments in SaaS. Even more interesting, ~40% of the organizations that Gartner surveyed are changing their IT environments completely from on-premise to cloud-based solutions. This end-user trend is reflected in the tepid financial performance of the SAPs and Intuits of the world while Salesforce, Concur, Taleo and others continue to grow at 40%+ (Ray Wang has an excellent analysis of this here).

The Business Drivers – Lower TCO while Increasing Flexibility and Innovation

We believe strongly that 2008 represented an inflection point in the adoption of cloud computing in large enterprises. This trend has only accelerated with the current financial conditions. As Nick Carr has observed, on-premise architectures are inherently wasteful (80% of server capacity, 65% of storage capacity are unused) and represent a fantastic opportunity for savings. However, the benefits of SaaS and cloud computing go far beyond savings alone. The “black magic” of SaaS is that companies can reduce TCO while increasing flexibility and innovation.

At Appirio, we experience this every day. We have a completely server-less internal architecture which has enabled us keep our IT costs at Our Prediction – Large Enterprises will Migrate Much More than Mail and CRM to the Cloud

SaaS is past the trial phase in many enterprises. Gartner notes that 40% of enterprises have 3+ years of experience with SaaS platforms. Companies have now experienced for themselves the benefits of SaaS within specific areas like CRM or messaging. We’re seeing within our client base that companies are ready for a more holistic cloud computing strategy. We’re increasingly working with large enterprises to quickly map their portfolios and develop roadmaps for large-scale migration to the cloud. Happy to see that Gartner agrees that this trend will accelerate in 2009!

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