Mobility Driving Hosted Services
You might not think there is much connection between software as a service (SaaS) and other basic trends in the enterprise, small and medium business segments, but there is. Analysts at The Yankee Group, for example, point out that in Europe, high degrees of worker mobility tend to correlate with higher degrees of use of hosted applications that workers can access from anywhere using a Web browser and broadband.
About 37 percent of enterprises currently use SaaS in some form, says Sheryl Kingstone, Yankee Group director. Enterprises with a more than 40 percent mobile workforce have adopted SaaS at a 51 percent rate, while enterprises with no mobile associates or as few as 20 percent mobile workers have adopted at a 24 percent rate.
So Kingstone suggests SaaS vendors should target industries such as professional services and telecommunications that have a higher percentage of mobile workers and a proclivity for SaaS applications.
Increased workforce mobility trends will continue to drive SaaS adoption, Kingstone predicts, as most enterprise managers see SaaS as a way to provide mobile workers with a common application interface and functionality regardless of location.
About 49 percent of enterprise respondents to a recent Yankee Group survey say they are making major efforts to enable mobile access to corporate applications. About 42 percent also are also replacing legacy applications with service-oriented applications primarily for reasons of agility.
Some 44 percent are developing easier-to-use business applications and 30 percent are adding mobility applications and features.
The most disruptive and emerging trend, however, is the rise of newer consumer applications in the enterprise environment. On average, 45 percent of respondents to the survey say that employees who introduce consumer applications into the workforce are an inevitable aspect of the IT environment.
On the other hand, about 41 percent of respondents say that practice is not allowed inside their organizations. In the finance and insurance verticals, this attitude is quite prevalent.
For example, 59 percent of finance or insurance companies take a “seek and destroy” attitude to unsanctioned applications, says Kingstone. In the professional services vertical attitudes are almost 180 degrees out of phase with the finance and insurance segment. About 80 percent of professional services firms believe that consumer applications make their workforce more productive.
SaaS adoption among European SMEs lags enterprise adoption rates, as you might expect. They are, however, increasingly concerned with using information and communications technology as a way to differentiate themselves from larger competitors, and this is leading to views on the application environment that mirror what enterprises think.
SMEs (one to 250 employees) often are highly focused on customer service as a way to differentiate themselves from large corporations. European SMEs also are less focused on cost cutting and improving efficiency than U.S. SMEs, and more focused on business applications to transform business processes and improve customer service, says Yankee Group Senior Analyst Gary Chen.
Technology solutions must align with these goals, says Chen. Medium enterprises are facing major challenges in application integration (44 percent), even more so than
budget or IT staffing constraints.
Very small enterprises are struggling with integrating their web site with business applications (29 percent) and require more education about the latest application technologies (32 percent).
Software as a service (SaaS) continues to make inroads into SMEs, with medium enterprises adopting much faster than smaller enterprises. However, adoption is still fairly low, ranging from 15 percent to 31 percent depending on size of enterprise.
The vast majority of SMEs report that they are not aware of SaaS or do not understand the business benefits of this model. Eleven to eighteen percent of SMEs (depending on size segment) are considering adopting some type of SaaS during the next 12 months and are considering it for a wide range of business application functions.
On that score, European SMEs are adopting SaaS slightly faster than U.S. SMEs, says Chen.
But the phrase “SME” obscures more than it reveals, according to Knecko Burney, Compass Intelligence president. That’s because small businesses with less than 50 employees are in fact quite different from “medium-sized” businesses with 50 to 249 employees.
“Medium” businesses spend more than four times what “Small” businesses spend in a given year on technology, for example.
Small businesses still embody the character and personality of the business owner and often respond to the whims and impulses of that owner. In some ways, small business decision-making is a little more emotional, as the personal feelings and impressions of the business owner really come into play.
In larger firms, particularly those with more than 100 employees, departments and defined business processes mean decision-making is a more technical process with lots less emotion. So the messages that resonate with the passionate small business owners will be different than those that resonate with dispassionate mid-sized business managers.
With average buying power of more than $400,000 per firm annually, these customers warrant more touch and feel than small business customers, which spend roughly $100,000 per year each.
The big take-away here is the driving role mobility is having in spurring adoption of managed services of all types. IP
