Key business drivers for ondemand or SaaS solutions

In addition to the regular benefits of SaaS application such as Cost effectiveness, ease of use and maintainability, some of the other drivers of OnDemand solutions are -

Today, organizations are expanding geographically and need their employees to work from home and on the road. OnDemand solutions help develop better communication, coordination and control across the workforce.

Now that everybody has become familiar with varied OnDemand solutions such as email, photo sharing, news, gaming, movies, social networking etc... Organizations are easily adapting to OnDemand solutions.

According to AMR Research 31.1% projects are cancelled before they are completed. Out of the projects that are finally completed, 52.7% overshoot the estimation by doubling the time or budget. For those software applications that are deployed, the maintenance and management costs often amount to ten times the original license fee. In fact, Gartner estimates that 80% of IT spending is consumed by routine maintenance and support, leaving only 20% of the IT budget to focus on strategic initiatives and innovation. The failure of legacy applications are making organizations take up OnDemand solutions.

Most organizations do not use all of their licensed ‘seats’ (software capacity). High maintenance fees and support costs for under-utilized applications are incompatible with the current environment of intensifying competition and tightening operating budgets. Legacy applications are reducing the return on the investment (ROI) and compounding the total cost of ownership (TCO).

In response to these trends, THINK strategies have found a growing willingness among organizations of all sizes to "out-task," or selectively outsource, the deployment and ongoing management requirements for an increasing array of business applications. Over the past two years, THINK strategies have teamed with the Cutter Consortium to survey over 100 IT and business decision-makers worldwide about their interest and adoption of On-Demand, SaaS solutions. The proportion of organizations that have adopted or are considering SaaS solutions has jumped from 65% in 2005 to 74% in 2006.

Not only is SaaS interest and adoption growing, but THINK strategies/Cutter Consortium’s survey research has also found that over 80% of current SaaS users are satisfied with their on-demand solutions, plan to renew and expand their use of SaaS, and would recommend SaaS to their peers. These are far higher satisfaction levels and referral rates than traditional hardware and software can boast of.

The growing success of SaaS has led Gartner to forecast that 25% of software sales will be in the on-demand category by 2010. IDC predicts that the SaaS market will grow at a 21% compound annual growth rate (CAGR) during the next three years, reaching $10.7B worldwide in 2009. In contrast, Forrester Research predicts that traditional on-premise enterprise application sales will only grow 4% per year through 2008.