Press Release

Egham, UK, June 14, 2010 View All Press Releases

Gartner Says Organizations Need to Re-Evaluate the Rationale for SaaS

Gartner Analysts Examine Best Practices for SaaS at the Gartner SOA & Application Development and Integration Summit 2010, June 14-15, in London

Software as a service (SaaS) will have a role in the future of IT, but not the dominant future that was first thought, according to Gartner, Inc. Organizations should carefully assess their software needs in light of the current promises delivered on by SaaS.

“In 2009, within enterprise applications, SaaS represented 3.4 percent of total enterprise spending, slightly up from 2008 at 2.8 percent,” said David Cearley, vice president and fellow at Gartner. Gartner predicts that this market will reach $8.8 billion in 2010.

From a market perspective, most of the spending for SaaS is occurring in content, collaboration and communication and the customer relationship management markets. Collectively, they represented 65 percent of the global enterprise applications software market in 2009.

Many of the bad practices that occurred in the on-premises world are now moving their way into SaaS. The biggest example is shelfware. “Shelfware as a service is the concept of paying for a software subscription that is not being accessed by an end user,” said Mr. Cearley. “This most commonly occurs in large organizations, but it could happen to any company, especially those that have downsized their workforce, or one that has oversubscribed to trigger a volume discount.”

SaaS may not have delivered on its early grand promises - of the current SaaS deployments we estimate that a total of 90 percent of SaaS deployments are not pay-per-use -, but it has re-energized the software market and added choice. SaaS does not solve all the challenges of software delivery, but can provide advantages based on the specific circumstances of a deployment as it is quicker to implement and configure for less-complex problems. “SaaS changes the role of IT from implementing its own operations to inspecting a vendor’s operations,” Mr. Cearley added.

Gartner said that SaaS will likely penetrate every company at one level or another and recommends that organizations consider four steps when evaluating SaaS:

  • Determine Value

SaaS is not a panacea, and companies need to evaluate and understand the trade-offs that SaaS presents. While it limits infrastructure overheads and management, and lowers short- to medium-term total cost of ownership, third-party application tools are limited and SaaS applications cannot be counted as assets on a balance sheet.

  • Develop Governance

The next step is to develop a SaaS policy and governance document. This document should be a collaborative effort between the business and IT to create internal and external SaaS governance model.

  • Evaluate Vendors

Organizations need to evaluate SaaS vendors for specific application needs as applicable. A vendor’s commitment to SaaS is not just measured in business performance, but in technical considerations, such as operations management capabilities.

  • Develop an Integration Road Map

This step will be a continuous process of developing an integration road map on how SaaS applications will integrate with on-premises applications and other SaaS solutions deployed.

Mr. Cearley will be speaking at the Gartner SOA & Application Development and Integration Summit 2010 which takes place June 14-15 in London. For further information about the conference please visit www.europe.gartner.com/SOA. You can also follow the event on Twitter at http://twitter.com/Gartner_inc using #GartnerSOA.

Members of the media can register by contacting Ben Tudor at ben.tudor@gartner.com.

About Gartner SOA & Application Development and Integration Summit 2010
The SOA & Application Development and Integration Summit 2010 features 17 leading Gartner analysts, who will provide advice on governing, composing and deploying applications to enable organizations to be agile, customer oriented, event aware, cloud enabled and socially connected. Delegates will also learn how to build a case for SOA and measure its success.

 

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Gartner, Inc. (NYSE: IT) is the world's leading research and advisory company. The company helps business leaders across all major functions in every industry and enterprise size with the objective insights they need to make the right decisions. Gartner's comprehensive suite of services delivers strategic advice and proven best practices to help clients succeed in their mission-critical priorities. Gartner is headquartered in Stamford, Connecticut, U.S.A., and has more than 13,000 associates serving clients in 11,000 enterprises in 100 countries. For more information, visit www.gartner.com.

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