SaaS: Driving faster implementation times and quicker return on investment, says Aberdeen study

By Sarah Bowling, Web Editor -- Logistics Management, 8/21/2006

BOSTON—A recently released research study, The Software as a Service Buyer’s Guide, by Boston-based research firm, Aberdeen Group, finds that the Software as a Service (SaaS) model, also known as on-demand or hosted applications, is driving faster implementation times and quicker return on investment.

Research of 631 companies conducted from March–July of 2006, revealed that SaaS is changing how companies pay for, implement, and run their software applications.

The typical implementation & ROI times for SaaS are as follows:

• Customer Relationship Management (CRM): Implementation in less than 2 months and ROI in less than 6 months
• Supply Chain Management: Implementation in less than 3 months and ROI in less than 1 year
• Sourcing and Procurement: Implementation in less than 2 months and ROI in less than 1 year
• Financial Management: Implementation in less than 3 months and ROI in less than 6 months
• Product Lifecycle Management (PLM): Implementation in less than 6 months and ROI in less than 1 year

“Although the value proposition of SaaS is seductive, companies considering SaaS need to educate themselves on a number of factors to make a solid buying decision,” says Beth Enslow, senior vice president of enterprise research for Aberdeen and report author. “First, realize that all SaaS is not created equal. There are five primary types of SaaS, with differing value propositions.”

Of the five SaaS models, more enterprises are using multi-tenant solutions today, said Enslow, in large part because this has been the most popular model among pure-play SaaS vendors. The multi-tenant solution drives the lowest total cost of operation for the vendor (just one software instance to upgrade and monitor) and also supports efficiencies in supplier and carrier connections, she added.

The report also found that most of the concerns regarding data security, system uptime, and integration with internal systems were unfounded. “Many SaaS users report better data security and better system uptime than they have with their internal applications—and just as easy internal integration,” said Enslow. 

The Aberdeen report, The Software as a Service Buyer’s Guide, documents the current usage of and interest level in SaaS across the major enterprise application areas and provides advice on which companies should consider SaaS for each application area and which will be better off with an on-premise solution. A complete SaaS evaluation framework is also provided to help enterprises make sound SaaS decisions.

Click here to download a complimentary report copy.