SaaS Usage Growing Even as Contract Terms Come Under Scrutiny

Although more than 95 percent of organizations expect to maintain or grow their use of software as a service (SaaS), 30 percent of enterprises using SaaS have renegotiated their terms before the end of the initial contract period. Also, 16 percent of SaaS customers said they're transitioning from SaaS to on-premises solutions.

Those are some of the results from a survey by Gartner conducted in December 2009 and January 2010. The research firm surveyed 270 IT and business management professionals from multiple industries in North America, Europe, and Asia/Pacific who were personally involved in enterprise SaaS implementations in their organizations. Half of those surveyed said their businesses have run SaaS applications for at least three years.

The most popular applications for SaaS usage, according to the results, are e-mail, financial management and accounting, sales force automation, customer service, and expense management. More than 30 percent of organizations reported the use of these types of applications.

Yet the research firm reported that only 39 percent of organizations have policies in place to govern the evaluation and use of SaaS, up a single percent from 2008 results.

Gartner said that some enterprises have found SaaS solutions less than optimal. No particular reason dominated responses, though key concerns include a rising total cost of ownership and integration issues, as well as a shift in sourcing strategy.

"These issues aside, organizations are becoming more savvy when it comes to renegotiating their SaaS contracts," said Sharon Mertz, research director at Gartner. "A key survey finding was that more enterprises are renegotiating contracts for greater functionality, additional users, and improved financial terms."

Additional information from the survey is available in Gartner's report, "User Survey Analysis: Software as a Service, Enterprise Application Markets, Worldwide, 2010," which is for sale for $1,295.

About the Author

Denise Harrison is a freelance writer and editor specializing in technology, specifically in audiovisual and presentation. She also works as a consultant for Second Life projects and is involved with nonprofits and education within the 3D realm. She can be reached here.

Featured

  • classroom scene with students gathered around a laptop showing a virtual tour interface

    Discovery Education Announces Spring Lineup of Free Virtual Field Trips

    This Spring, Discovery Education is collaborating with partners such as Warner Bros., DC Comics, National Science Foundation, NBA, and more to present a series of free virtual field trips for K-12 students.

  • glowing padlock shape integrated into a network of interconnected neon-blue lines and digital nodes, set against a soft, blurred geometric background

    3 in 4 Administrators Expect a Security Incident to Impact Their School This Year

    In an annual survey from education identity platform Clever, 74% of administrators admitted that they believe a security incident is likely to impact their school system in the coming year. That's up from 71% who said the same last year.

  • horizontal stack of U.S. dollar bills breaking in half

    ED Abruptly Cancels ESSER Funding Extensions

    The Department of Education has moved to close the door on COVID relief funding for schools, declaring that "extending deadlines for COVID-related grants, which are in fact taxpayer funds, years after the COVID pandemic ended is not consistent with the Department’s priorities and thus not a worthwhile exercise of its discretion."

  • pattern of icons for math and reading, including a pi symbol, calculator, and open book

    HMH Launches Personalized Path Solution

    Adaptive learning company HMH has introduced HMH Personalized Path, a K-8 ELA and math product that combines intervention curriculum, adaptive practice, and assessment for students of all achievement levels.