RobinB sent me the latest McKinsey enterprise software report. It makes for interesting reading and will validate what SaaS vendors already know. It’s very interesting that a large number of respondents described SaaS as the most important trend impacting the business, this shows that SaaS goes beyond simply another way of delivering software, but actually delivers (or can deliver) added value to customers. Customer criteria for choosing SaaS providers are, unsurprisingly, weighted in favour of quick deployment, the vendor track record and costs. The two graphs below highlight these results;
There are some interesting results in terms of software budget spread – it shows that smaller business are spending less on traditional software licences, and more on subscription services than their larger business brethren. It also shows the expectation that this trend will ramp up over the coming year.
Finally, and not unexpectedly, there are some interesting results in terms of both decision making process and vendor preference across different sized businesses. Larger enterprises show a far higher incidence of expressing a preference for SaaS to be supplied by a traditional mega-player (as opposed to an incumbent or startup). SMEs however tend to prefer the smaller, more agile and proactive startups and SaaS incumbents.
So… what are the takeouts from all of this?
- Traditional software vendors need to think long and hard about whether they can successfully transition to SaaS
- SaaS startups are best to focus their attention on the SME market
- SaaS is gaining traction rapidly
- SaaS vendors need to focus strongly on deployment and integration
- Traditional vendors should be concerned, their lunch may not being eaten yet but it’s getting closer