Saugatuck s 2012 Global Cloud Business Software Survey: Data Report Abridged Version for Registered Website Members March 21, 2012
Table of Contents About This Report Research Summary Highlights Areas of Inquiry: Enterprise Business Goals Through YE 2012: Focus is on Improving Profitability Business Software Deployment Preferences Over Time: Is Hybrid Short-changed? SaaS Business Software Purchase Plans: Tiers of Relative Strength SaaS Business Benefits Expected: Lower Costs, Faster Speed, Better Business Concerns Regarding SaaS: Security First; Integration a Distant Second Appendix A: About the Survey / Demographics About Saugatuck Technology Page: 2
About This Report This document is an abridged version of the full data review and analysis report published for clients of Saugatuck s Continuous Research Services (CRS-Base) subscription research and inquiry program. The complete report represents a comprehensive review and analysis of data gathered via Saugatuck s February 2012 global web survey of enterprise executives regarding SaaS/Cloud Business Solution adoption and use. In the complete report, the data are reviewed and analyzed in the aggregate, and by size of survey participant company, by geographic region (North America, Europe, Asia/Pacific), and by level of survey participant management responsibility (e.g., C-level, VP-level, etc.). Details regarding the survey, methodology, and demographics can be found in the Appendix to this report. All content has been developed by, and is the copyrighted property of, Saugatuck Technology Inc., which is solely responsible for the content. Additional in-depth analysis will be provided to Saugatuck CRS clients through a series of Strategic Research Reports and Strategic Perspectives. Bill McNee led the development of the survey. Bruce Guptill led the creation of this summary data report with contributions from Mike West, Charlie Burns, Alex Bakker and Bill McNee. Page: 3
Research Summary Highlights: 1 of 3 Enterprise IT and business executives alike are focused on business goals that emphasize revenue growth from their existing business footprint combined with improving profitability rather than business expansion. This emphasis on improving existing operations and market profitability is a critical influence on IT acquisition, use, and management decisions. Saugatuck sees this as a key driver of more innovative business and IT management, helping to reshape IT mission and roles. Preferences for deploying new on-premises business software decline rapidly over the next two years, as enterprises shift toward hybrid on-premises+cloud offerings. However, much of that hybrid focus shifts toward pure-play SaaS/Cloud within just a few years, suggesting a challenging transitional period for enterprise IT. Meanwhile, SaaS adoption and use is shifting from a point-solution focus toward a more integrative approach favoring suites over best-of-breed solutions. Page: 4
Research Summary Highlights: 2 of 3 CRM, Collaboration, Customer Support, HR/HCM, and Collaborative Commerce will lead SaaS/Cloud solution demand through 2016 Traditional enterprise business management IT, especially applications and operations concerned with core finance, continues to resist SaaS/Cloud encroachment. On-premises solutions closer to the money (e.g., Finance / Accounting, Budgeting, Reporting & Planning and GRC) will be slower to migrate to Public and Private Clouds (especially in larger enterprises). Across all solution categories, single-vendor business suites are the mostpreferred means of acquiring and using business software. Combining these results with preferences for solutions that are part of a multi-vendor suite, two-third to three-quarters of enterprise executives prefer suite-supported versus best-of-breed solutions. While reducing IT and business costs remain top-of-mind when it comes to SaaS/Cloud adoption globally, business flexibility and agility overall rule enterprise SaaS decisions especially among leapfrogging Asian enterprises. Page: 5
Research Summary Highlights: 3 of 3 Data security, privacy, and integrity concerns rightly rank as top SaaS/Cloud adoption concerns, as they do with most other new forms of IT. A high ranking of broad integration and customization concerns indicate that SaaS use is shifting away from point-solution-use and increasingly toward integrative business operation and management benefits. Executives continue to prefer to acquire SaaS direct from SaaS/Cloud providers, but a solid and growing expression of support for platform providers, hosters and VARs indicates some change toward more / better integration and customization, which in turn enable more / better operational and business management including potentially more effective use of shared SaaS data. The ability to prove SaaS ROI is improving, suggesting more and better SaaS awareness and management from procurement through usage and more rigorous acquisition procedures focusing on financial returns. Bottom line: SaaS is beginning to fulfill its initial promises as an enabler of more effective and efficient business operations, and is being used as would any mainstream business IT to meet business needs and goals. The SaaS/Cloud future is here, and needs to be well managed. Page: 6
Business Goals: Focus is on Improving Profitability Tier 1 Tier 2 Tier 3 Please rate how important achieving each of the following business goals is for your organization over the next 12 months: Increase sales revenue Reach new customers Increase market share Improve product or service quality Sell more to existing customers Increase profit margins Manage budgets Decrease operational expenses Reach new markets Determine better ROI metrics on Improve investor relations/build investor Enter new geographies Change the organization s business model 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Saugatuck Technology n=228 Notes on the Data The top 3 answers, 4 of the top 5, and 9 of the top 10, are about increasing revenue and/or profit 3 of the top 4, and 4 of the top 5, are focused on outreach. The middle tier is very cost-managementfocused again, to improve profitability. New markets and new geographies are well down the list of business priorities. NOTE: The data in this table aggregates Extremely Important + Very Important answers Saugatuck Insight: Businesses worldwide are still in recovery mode. The business focus through at least 2012 is, and will be, on improving existing presence, and improving profitability. This suggests that IT investments will focus on communication, (including interaction throughout trading circles), along with process and management improvement. 2012 should be a very good year for the adoption of Social, BI/analytics, and business management solutions. Page: 7 39% 38% 36% 55% 51% 62% 72% 71% 69% 78% 74% 82% 79%
Business Software Deployment Preferences Over Time 60% 50% 40% 30% 20% 10% 0% My company s preference for deploying new business software (on a continuum from On-premise to Hybrid-Cloud to pure-play Cloud) will be: 50% 40% 10% 18% 63% 19% 47% 2012 2014 2016 39% On-premise Cloud + On-premise (Hybrid or Highly Interwoven deployment) Cloud-based (pure-play) Notes on the Data Hybridized environments appear to be seen as transitional phase toward a Cloud-dominated future. Enterprises appear increasingly hopeful that more IT and business can and will be moved to Cloud over a very short period of time. The data suggest rapid and massive Cloud use growth from 2014 2016. Potential size-based, industry-based, and region-based differences need to be examined closely. Saugatuck Insight: The data certainly suggest that what we currently consider as hybridized environments blending onpremises and Cloud are considered to be somewhat of a transitional phase, and that IT and business leaders see Cloudbased solutions as dominating the longer-term future. We believe that this view will change more in favor of hybridized, interwoven IT and business environments as enterprises increasingly experience them through 2014. Page: 8 Source: Saugatuck Technology n=228
SaaS Business Software Purchase Plans Collaboration / Communications / Social CRM / Salesforce Automation Customer Service / Support Human Resources / Talent Management ecommerce / Collaborative Commerce Procurement / Sourcing / Spend Management Software Development / Test Business Intelligence / Advanced Analytics Budgeting / Reporting / Planning Governance, Risk and Compliance ERP / Manufacturing / Supply Chain Finance / Accounting 8% 8% 24% 20% 22% 17% 27% 10% 17% 10% 19% Notes on the Data No business software category will remain without massive Cloud use by YE2014. Finance/Accounting looks to advance significantly through YE 2014. Three clear tiers emerge over time, with the top tier clearly based on current adoption trends: Collaboration, CRM, Customer Support, & HR. Top-tier categories show strong adoption slowdowns through 2013, with reacceleration in 2014. Saugatuck Insight: This indicates the purchase of at least one instance in each category, and not all instances or uses. The core message is that the move toward the use of Cloud-based business software is inexorable, but not universal or complete. The fact that no categories add up to 100% suggests strongly that not all business software will be Cloud-based in the foreseeable future. And again, the closer we get to core enterprise money, the less Cloud presence is expected. Page: 9 20% 19% 19% 17% 18% 17% 18% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Aleady in Use (by YE2011) 2012 2013 2014 2015 or Beyond Source: Saugatuck Technology n=228
SaaS Business Benefits Expected Reduce capital and/or operating costs 46% Notes on the Data Speed of implementation / time-to-value Speed time to market Simplify software management Increased functionality / ease-of-use Improve management of mobile 29% 25% 24% 23% 38% Reducing IT and business costs remain top-of-mind when it comes to SaaS/Cloud adoption. At least 9 of the ranked expected benefits are agility related. Convert fixed IT costs to variable costs 23% Enable business process improvement 22% Improve service levels 22% Improve internal and external 19% Increase revenue 17% Other, please specify 0% 10% 20% 30% 40% 50% Saugatuck Insight: Top-of-mind responses seem to be influenced to some extent by the ongoing perception that SaaS/Cloud is cheaper than alternatives (which it often is in point-solution environments) - but more importantly, we see a continuation of the theme established by our first data slide, that of a focus on business efficiency improvement. Overall, SaaS is seen as a means to improve IT and business agility, flexibility, responsiveness, and speed. Page: 10 Source: Saugatuck Technology n=228
Concerns Regarding SaaS Data Security & Privacy concerns Integrating Cloud Solutions with existing enterprise Integrating Cloud-based data with existing enterprise data Data / Transaction Integrity concerns Ability to customize solution to unique business Viability of Cloud vendors Regulatory concerns Ensuring performance meets / exceeds service level 31% 29% 28% 25% 22% 22% 22% 59% Integration & customization concerns indicate more awareness of SaaS/Cloud presence and interdependencies. Notes on the Data We would be most surprised if security and privacy concerns were not ranked at the top of the list. They remain the chief IT and business concerns, regardless of technology or application Integration and customization rankings are significantly high. Availability of technical support and maintenance ROI of Cloud not yet verified Ability of end users to adapt to new Cloud business 17% 19% Other, please specify 0% 20% 40% 60% Saugatuck Insight: The overall high rankings of integration and customization concerns suggest that IT and business leaders are seeing more SaaS, and seeing how SaaS (and the enterprise) can benefit from interoperating i.e., more/better economies of scale, along with more/better abilities to share and use business data. SaaS deployment and management is becoming more about business use and management than immediate gratification. Page: 11 Source: Saugatuck Technology n=228
Appendix A About the Survey / Demographics In January and February, 2012, Saugatuck Technology conducted a global survey focused on preferences for deploying new business software / solutions 2012-2015. In total, the survey yielded 228 completed responses 52 percent from North American, 31 percent from Europe, and 18 percent from Asia Pac. 81 percent of the survey respondents had a title of Director or higher, with 42 percent of working in a business function (sales, marketing, finance, HR, operations) vs. 51 percent in IT. 61 percent of the survey respondents worked for companies with greater than 1,000 employees. The survey achieved a solid distribution across industry segments. By Region North America 52% EMEA 31% Asia Pac 18% Total 100% By Employee Size By Function Business 42% IT 51% Other 7% Total 100% < 100 11% 100-999 28% 1,000-4,999 27% 5,000+ 34% Total 100% By Title CEO / CFO / COO 11% CIO EVP / SVP / Gen Mgr 19% VP Director 25% Manager Other 3% Total 100% By Industry Bus / Prof Services 18% Manufacturing Public Sector 3% High Technology Energy / Utilities 5% Financial Services Healthcare / Pharm. 7% Media / Entertainment 2% Retail / Distr. / CPG Telecom 1% Other 8% Total 100% Page: 12
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