- Nick Carr: SaaS adoption set to explode
Large companies appear to be jumping en masse onto the software-as-a-service bandwagon, according to a new survey of CIOs by management consultants McKinsey & Company. The survey found that 61% of North American companies with sales over $1 billion plan to adopt one or more SaaS applications over the next year, a dramatic increase from the 38% who were planning to install SaaS apps in 2005...[continued]
Directionally, there is absolutely no reason to discount McKinsey's findings. But I'm very curious to see the full report once it comes out because I have a lot more questions than answers at this point.
- How did McKinsey define SaaS? -- Put 20 technologists in a room and ask them to define SaaS, and you're going to get at least a dozen different answers. Is SaaS any software solution that's provided in a hosted environment? Is multi-tenancy a necessity? Is subscription pricing requisite? If McKinsey doesn't tightly define SaaS to the CIOs surveyed, the potency of this data loses much significance.
- What % of total software spend does this encompass? -- 61% of CIOs is a big number, but it's equally important to understand the proportion of their dollars being allocated to SaaS. Enterprise-class SaaS already exists in many flavors, from some of the things ADP is doing (including recent acquisition Employease) to talent management to time&expense reporting. But these are small portions of the total spend and have been easier transitions to OnDemand because they're often not considered key differentiators within an enterprise (they're really commoditized cost centers). Are CIOs evaluating SaaS for core HR functionality? Financials? Compliance? Supply chain planning?
- Are CIOs being driven to embrace SaaS from departmental adoption? -- Regardless of what the McKinsey survey may say, there are plenty of Global 2000 CIOs that are pigheaded about SaaS and dismiss it out of hand. It's been my contention for some time that SaaS adoption is driven by user mandate. For example, SfDC has become so popular because a) it works and b) sales reps have mandate within an enterprise. But I've questioned whether other departments within large organizations could mandate SaaS adoption as easily. This survey may be tangible evidence to the contrary.
- Nick Carr...SaaS adoption set to explode
- Vinnie Mirchandani...SaCS (Software as a Customized Service)
- Phil Wainewright...Huge jump in SaaS adoption plans