Software as a Service: Collaboration and Productivity Apps Rising in 2008

More than a third of small and large businesses will adopt software as a service (Saas) into their technology portfolio during the next year to help bolster activities such as project management and internal collaboration, according to report by THINKstrategies and the Cutter Consortium.

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In a study of 100 large and small companies, researchers found that nearly 36 percent of are considering bringing software-as-a-service technologies into their organizations. About 80 percent of those considering it say they plan to adopt it within the next 12 months. Of those companies already using SaaS, 90 percent said they would expand their use of it.

Traditionally, the majority of SaaS applications have been utilized for Customer Relationship Management (CRM), as evidenced by the success of vendors such as Salesforce.com. But Jeffrey Kaplan, managing director of THINKstrategies, says adoption of end-user productivity and collaboration apps is increasing.

According to a research note by Nucleus Research, the enthusiasm for SaaS might be driven by business heads in departments like sales and marketing, where the need to manage critical projects have been stymied by inadequate IT-provided tools, such as traditional corporate e-mail.

With the SaaS model, where software is delivered over a web-browser, business department heads don’t need to wait for IT to deploy new tools such as wikis and blogs. Instead, they can charge a hosted application to their corporate credit card, get user names and passwords, and be up and running.

“Lines of business have gotten much smarter about getting this stuff on their own,” says Rebecca Wettemann, a Nucleus Research analyst. “If IT wants to be in the conversation, they need to get ahead of the curve in presenting these to end users.”

Wettemann also estimates that on-demand productivity apps, such as Google Apps and Zoho, will make more in-roads with businesses during the coming year as they look to save money on costly on-premise software for people who aren’t power users.

“If you’re someone who just uses Microsoft Excel to make lists, you probably don’t need Microsoft Excel,” Wettemann. “Businesses might look at tiering their office apps, particularly as they look at the next version of Microsoft Office.”