Saas adoption among US SMBs on rise

NEW YORK: Among U.S. small and medium businesses (SMBs), SaaS adoption is rising steadily. 21 percent and 31 percent of SBs and MBs currently use SaaS solutions, which is double the percentage of adoption in 2004. Spurred by the need for easy to use, implement and maintain IT solutions and limited infrastructure and IT resources, and fueled by growing choice and solution availability, SaaS is gaining popularity in the SMB market.  

According to Access Markets International (AMI) Partners, Inc’s 2008 U S Small and medium Business applications & soultion market overview, SaaS penetration and spending in the MB sector is significantly outpacing penetration among SBs. Across the board, MBs spend an average of six times more than SBs on SaaS annually, and are twice as likely as SBs to report a planned increase in SaaS spending for the next twelve months. The largest MBs—those with 500-999 employees—report the highest in annual SaaS spending among all SMB size segments.

While SaaS is growing among SMBs, it has yet to reach the mainstream. “The recent growth in SaaS is partly due to the growing number and variety of SaaS offerings both established IT vendors such as Microsoft, SAP, IBM, Google and saleforce.com, which underscores the viability of SaaS,” said Sau Lam, Business Applications & Solutions Analyst at AMI-Partners. In addition, a bevy of newer SaaS vendors, such as NetBooks, Longjump and Coghead, are creating more solutions designed specifically for SMBs.

“But, more work is required to propel SaaS to the next level of growth. SaaS vendors need to intensify campaigns to educate and spark interest among SMBs that are not yet considering SaaS, identify other needs that existing customers have and develop and partner to extend their offerings to increase share of wallet. In addition, they need to build channel programs with partners that can persuade SMBs that are not yet considering SaaS to give it a serious look.”

As part of a comprehensive view of SMB business application and solution adoption patterns and plans, this report also examines other key SaaS trends, such as differences in the types of SaaS applications that SMBs are adopting and plan to adopt in the next twelve months. For example, the top three SaaS applications currently used by SBs include banking/finance, instant messaging (IM) and payroll processing, while payroll processing, banking/finance and human resources management lead in the MB segment. Meanwhile, both SMBs show strongest interest in using SaaS for collaborative and business intelligence solutions in the next 12 months.