A newly released IBM global survey with 879 respondents shows that not only are companies of all sizes taking up SaaS, but that those with an overall cloud-computing strategy and a close partnership between IT and line-of-business (LOB) leaders get the maximum business advantage from the services they choose. While Infrastructure-as-a-Service (IaaS) has gotten the lion’s share of the industry press in the last few years, SaaS is a major part of the cloud market, with companies of all sizes using services. Gartner estimates that global spending on SaaS will reach $45.6 billion by 2017, with much of that bought by business executives rather than IT. Gartner predicts by 2017 CMOs will spend more on IT than CIOs, much of that on SaaS.
The IBM survey found that the majority of businesses initially approach SaaS for cost control, but that once they gain experience with using the services they cite increased competitive advantage and faster time-to-market as the main business benefits gained. The companies that reported realizing the greatest business advantage from SaaS consider cost savings as an extra, not a main reason to use SaaS.
“One of the key narratives in the marketplace … is this whole concept of shadow IT and rogue buying and business leaders sort of going behind the backs of the IT leader and consuming software-as-a-service applications,” said Armen Najarian, program director for SaaS marketing at IBM. “That behavior certainly exists…. But one of the really counter-intuitive points that we took from this research when we looked at leading organizations that are winning with SaaS is that there’s a high degree of collaboration between lines-of-business and IT leadership. There’s a mutual respect… in the most evolved companies.”
IBM segmented the respondents into three categories based on the level to which they have deployed SaaS across their organization, the number of application areas they have embraced, and the extent to which they are driving or gaining competitive advantage from their SaaS deployments. They then compared the top 19 percent of respondents based on those measures, which make up the pace setters category, against those in the chaser categories. Some major differences became obvious in the comparison.
Top business benefits
“Among the pacesetter population, the top three motivators [of SaaS adoption] had nothing to do with reduced cost,” Najarian said. “It was all around collaboration, both internally within the workforce and externally, across the value chain, … driving a better customer experience and faster time-to-market. Cost was a benefit but not a driving factor.”
Within the pacesetters 71 percent cited a close level of collaboration and mutual respect between CIOs and LOB leaders, versus 36 percent in the chaser population. 74 percent of pacesetters saw SaaS as strategic in increasing self-service capabilities within applications versus 26 percent of chasers. 76 percent of pacesetters viewed SaaS as driving improvement in application agility, versus only 28 percent of chasers.
Having a strong plan for incorporating cloud services in general into the IT infrastructure, based on the unique business value those services offer to specific applications and business environments, is vital to realizing maximum value from cloud investments, Najarian said. That plan should encompass hybrid cloud, Infrastructure-as-a-Service and Platform-as-a -Service as well as SaaS and define overall strategy including standard providers and services and what kinds of needs are best met with cloud versus in-house and SaaS versus IaaS or PaaS. One important issue that should be part of the plan is integrating services and data from different SaaS and other platforms, including traditional in-house systems. One issue with SaaS is that the services can become islands of automation. Even if IT does not have an immediate answer for this, the plan should recognize the issue and work toward that solution, he said.
“This study really helped to clarify and expose the fact that SaaS has taken center stage in companies of all sizes,” he said. “The big take away is that there is a marked difference in behaviors between the most successful companies and the rest of the pack, and that the two big drivers of business success with SaaS and cloud in general are alignment between IT and the lines-of-business and the presence of a broader cloud computing strategy.”