Software as a Service is heating up industries #SaaS

Although the New York weather is cooling down, the benefits of Software as a Service are heating up. Members of the technology world know that SaaS is a hot topic – the SaaS market is forecasted to grow at a CAGR of 20.2% in 2012-2017, reaching US$45.6 billion by 2017.

Why are so many companies adopting SaaS?

Earlier this year, the IBM Center for Applied Insights released “Champions of Software as a Service: How SaaS is fueling powerful competitive advantage”, based on a global study of 879 IT and line-of-business (LOB) SaaS decision makers. We found that most organizations start their SaaS journey seeking lower total cost of ownership: It’s the #1 driver for SaaS adoption, and 41% of respondents are achieving it to a high degree. However, our research also reveals that competitive advantage is an even bigger outcome, with 47% of enterprises reporting a competitive edge courtesy of SaaS.

Click to enlarge infographic or download PDF version

So what do we mean by “competitive advantage”? Through SaaS, many organizations are achieving enterprise efficiency, deeper collaboration, better decision making and market agility. Digging deeper, we wanted to see which industries are leading the pack, and which are lagging behind. We created a heat map to visualize the percentage of respondents from each industry that achieved a particular outcome to a significant degree with SaaS.

Looking across industries and outcomes, three key findings stood out:

1.  The pharmaceutical industry is the clear leader when it comes to outcomes achieved through SaaS. To understand why, we tapped an expert in both Pharma and SaaS to explain. He highlighted how, within the Pharma industry, IT and LOB tend to work together. His reasoning: SaaS supports strategic Pharma moves, such as managing clinical trials in a cloud-based environment to allow for faster trial set up and simplified management, data aggregation and analysis. These strategic applications also require cross-enterprise cohesion. Behind Pharma, Retail and Telco ranked next highest in applying SaaS to excel at particular objectives.

2.  Conversely, the Insurance industry is the farthest behind in terms of achieving business outcomes through SaaS. Other lagging industries include Energy & Utilities and Travel & Transportation. What might be hindering their progress? Perhaps it’s Security, which was the #1 inhibitor for adopting SaaS across all organizations. But don’t let security scare you away – the upside of SaaS is strong, as evidenced by the outcomes many are achieving. Another critical enabler is tighter alignment across your IT and business functions.

3.  Across industries, several business outcomes were achieved more commonly than others. Considering the wealth of data available today and the emergence of the Chief Data Officer role, it’s not surprising that the #1 outcome achieved through SaaS was leveraging analytics to turn big data into insights. The next most common business outcomes were improving the customer experience and changing the organization’s business model. These top outcomes clearly demonstrate the transformative power of SaaS. They also highlight our main study finding: SaaS is about so much more than “enterprise efficiency.” (related:  Get to know your CDO)

What are your key insights from the heat map? Is your industry heating up with SaaS?

And how about your organization? Take your SaaS pulse with our interactive tool to see how your responses to nine questions measure up to the Pacesetters identified in our study. And be sure to read the study to learn more!

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