Sourcing and Vendor Relationships
Vol. 6, No. 22
One of the most significant trends fundamentally disrupting the way
in the IT industry is the transfor- the software industry is structured.
mation of the software business
model from packaged products to A recent Cutter Consortium
subscription services. This move- survey found that enterprises are
ment is being fueled by a combina- moving quickly to take advantage
tion of customer frustration with of software-as-a-service (SaaS).
traditional software applications This is the first in a series of
and the emergence of new Web- Executive Updates that examines
this issue. Overall, those that have
based software development
mechanisms that make it possible already acquired SaaS solutions are
to deliver robust software function- satisfied with the results and plan to
ality via the Internet. expand the range of applications
Mainstream The trend is not only changing the
way many organizations leverage
they acquire via this new model.
Here in Part I, we provide a quick
software applications, it is also history of the evolution of SaaS and,
by Jeffrey M. Kaplan, based on Cutter’s recent survey
Cutter Consortium SURVEY DEMOGRAPHICS
In September/October 2005, Cutter Consortium conducted a survey of 118
enterprise IT professionals. The participants represent nearly every major
industrial sector, government entity, and nonprofit institution, including
universities and medical/healthcare service providers.
One-quarter of the respondents have senior management/policy-making
responsibilities, and another 23% are in IS/IT management.
Almost half (48%) of the respondents work in organizations based in North
America. One-fifth (20%) work for organizations located in Europe, another
fifth (20%) are located in Asia, and the remainder are spread across the rest
of the world.
Approximately one-third (35%) of the respondents work in organizations with
50 or fewer employees. Almost as many (32%) work in organizations with
between 50 and 1,000 employees. The remaining 33% work in organizations
with more than 1,000 employees.
EXECUTIVE UPDATE 3
are the most likely types of appli- In fact, approximately 85% of the accelerate the software deploy-
cations to be acquired via SaaS respondents expect to generate up ment process and the opportunity
providers. However, Cutter’s to 30% cost savings by leveraging to have inhouse IT/application
survey found that a substantial SaaS. In addition to the cost-savings development staff focus on more
proportion of customers are cur- potential of SaaS, the ability to strategic projects are the next most
rently using or considering SaaS
alternatives for traditional enter-
prise resource planning (ERP), 57%
HRM, supply chain management 60%
(SCM), and other application
packages (see Figure 3).
Percentage of respondents
WHAT’S DRIVING CUSTOMER
DEMAND FOR SaaS? 40%
SaaS is gaining attention and win-
ning customer adoption because of 30%
its attractive combination of accel-
erated deployment capabilities and 18%
potential cost savings. 20%
As Figure 4 illustrates, 86% of sur-
vey respondents admit that they are 10%
leveraging or plan to take advan-
tage of SaaS because of the poten- 0%
tial cost savings from this software Less than 6 months 6-12 months More than a year
Figure 2 — Within what time frame do you expect to adopt SaaS?
40% 38% 38%
Percentage of respondents
CRM SFA ERP HRM SCM Other
Figure 3 — What types of SaaS are you using or considering using?
(Please select all that apply.)
www.cutter.com Vol. 6, No. 22
Every workshop is led by one of
Cutter Consortium’s expert Senior
Consultants — experienced IT
professionals who have honed
their skills and developed their
methodologies over years in the
field, at companies like yours.
Kent Beck In these times of intense pressure to make every
E.M. Bennatan development dollar and every development minute
count, the maxim you are only as strong as your
Mike Cohn weakest link has never rung truer.
Tom DeMarco Moving your development organization Workshop Topics
Jonathan G. Geiger up the productivity curve will improve
Peter Herzum the ROI of every one of your projects. Agile Development Methodologies
Jim Highsmith Just trace this back and you’ll discover Business-IT Alignment
Wendell Jones the ROI in training is immense. And Data Quality
Jeff Kaplan with training and workshops designed Data Warehousing
Joshua Kerievsky and delivered by Cutter Consortium’s Enterprise Architecture
Bartoz Kiepuszewski Senior Consultants, you can add to
Tim Lister Estimation Techniques
that equation the peace of mind you
Lisa Loftis Extreme Programming
get from being trained by the best
of the best. IT Strategic Planning
Terry Merriman Knowledge Management
Larissa Moss Cutter Consortium offers inhouse
training solutions from IT project Metrics/Benchmarking
Carl Pritchard management techniques to software Outsourcing
Helen Pukszta development methodologies, improving Project Management
Thomas Redman data quality, architecting Web services Requirements Management
Suzanne Robertson applications, aligning business and IT
objectives and more.
Software Development Practices
Teamwork and Leadership
Karl Wiig Testing
Bob Wysocki Web Services
For details about the courses offered in each
37 Broadway, Suite 1 of these areas, contact Dennis Crowley at
Arlington, MA 02474-5552, USA +1 781 641 5125 or email@example.com,
or visit www.cutter.com/workshops.
Tel: +1 781 648 8700
Fax: +1 781 648 1950