Nine out of 10 companies plan to increase their use of software-as-a-service (SaaS) next year, according to a global survey by IT research firm Gartner.
SaaS is a model of software deployment where an application is hosted as a service provided to customers across the internet. By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation and support.
More than a third of respondents plan to replace on-premises software with SaaS to drive down total cost of ownership, Gartner found. Emirates Business spoke to technology company officials to obtain a clear perspective on the subject. The panel consisted of Maria Medvedeva, Regional Director, Technical Sales, Computer Associates; Bashar Kilani, Manager of IBM Software Business for the Middle East, Egypt and Pakistan; Kevin Scott, Vice-President, Large Enterprise, SAP Middle East and North Africa; Benjamin Pring, Research Vice-President, Department of Software and Services at Gartner; Michael Geisler, Business Development Manager for Cloud Solutions, Majitek; and Altaf Ali Mohamed, Managing Director, Media Solutions.
Is it expensive to deploy and use SaaS solutions?
Medvedeva: SaaS offers a low, monthly per-user subscription that requires no capital investment to get started. SaaS solutions help companies maintain low infrastructure cost, reduce release management, avoid large up-front investments, and with pay-as-you-go subscription pricing SaaS can improve IT economics.
Kilani: Customers are not only trying to cut down on infrastructure costs but are also trying to reduce risk and operational overheads when deploying SaaS solutions.
Scott: Companies using SaaS are able to use standard business software without having to maintain a cost intensive on-premises solution.
Pring: SaaS can be cheaper to deploy, from a hardware, software and implementation perspective. Like any lease, though, it can become more expensive over a longer period than buying outright.
Geisler: Cost savings are the primary reason all customers, big or small, are taking a serious look at SaaS.
Ali Mohamed: Our SaaS solutions provide the same technical capability as any in-house solution with a distinct cost advantage as the entire solution is completely managed for them.
Where in the Middle East do you see the highest uptake of SaaS solutions?
Medvedeva: SaaS solutions are delivered 100 per cent over the web. The uptake will be higher among organisations that seek the flexibility of anywhere access, want to accelerate adoption, minimise the time and risk of deployment and reduce capital investment through operational efficiencies.
Kilani: As with a lot of IT trends in the region, initially we're seeing the largest uptake in the UAE. However, a large number of companies are implementing SaaS throughout the Middle East.
Scott: The Middle East is in the early stages of SaaS adoption. SaaS is applicable to all industry segments. However, organisations with web-based and web services environments are in a stronger position to adopt SaaS.
Pring: Kuwait and Saudi Arabia have significant tech user populations. But given this is so early in the region it is very difficult to answer currently.
Geisler: We see interest across the region in all industry segments. In particular, organisations that have already moved to a predominately web-based online environment for their applications are in a strong position to take advantage of SaaS economics.
Ali Mohamed: SaaS is country agnostic and can be deployed anywhere in the Mena region. All that is required is access to the internet and a forward-thinking leader. Therefore, it is likely that the most developed countries will start to adopt SaaS solutions earlier than other countries. So we see a large demand in the UAE, Kuwait and Saudi Arabia.
What kind of customers are adopting SaaS solutions?
Medvedeva: From an industry standpoint, financial services, communications, services and manufacturing have most experience of SaaS and their adoption rates are high. Government and education should start utilising this model more as their adoption rates are low.
Kilani: The majority of customers have a good understanding and are aware of the solutions but for the most part small businesses have been the most pro-active in implementing SaaS.
Scott: SaaS is applicable to business of all sizes, but is especially relevant for small businesses. SAP's unique solution targeted at this segment is SAP Business ByDesign.
Pring: We estimate that 75 per cent of the value of the $6.5bn (Dh23.8bn) worldwide market has been acquired by large enterprises whereas 75 per cent of users are small businesses. That means there are a small number of large installations in the market but that the deployment size is still small.
Geisler: Small businesses have been early adopters of SaaS, particularly around collaborative applications such as e-mail, content management and CRM. Larger organisations look at this very seriously on a cost-saving basis. Managed services is a major step towards taking on a pure SaaS model, likewise, when offering new applications and services to customers, we see increased interest and preferences in those applications being delivered as SaaS.
Ali Mohamed: Customers adopting SaaS solutions include small businesses that want to defer capital expenditures on IT infrastructure, and those wanting the same level of sophistication as larger enterprises and companies that do not have the financial and technical resources to implement proper IT.
What kind of feedback are you receiving from customers about SaaS?
Medvedeva: Our customers achieve lower total cost of ownership of IT, gain faster time-to-value and reduce IT costs through better integration, automation and control.
Kilani: The feedback is very positive with companies finding themselves with smarter organisations that are better equipped to deal with today's fast-paced business environment.
Scott: SaaS is still an emerging technology, and its adoption is in infancy in the Middle East. Companies are evaluating the trade-offs they will have to make in terms of functionality versus cost of ownership, simplicity versus in-house ownership, standardisation versus customisation. Furthermore there are still many limitations in terms of the localisation of currently available SaaS solutions.
Pring: We speak to a lot of happy customers. A lot of IT directors are now looking to introduce more rigorous due diligence around the use of SaaS and this will place SaaS vendors under far greater levels of stress testing than they have experienced so far.
Geisler: There is a huge amount of interest in SaaS-style solutions now. The current economic climate has forced customers to look at ways to run their business more cost effectively and with increased agility.
Ali Mohamed: So far our customers are very satisfied with the type of SaaS solutions we provide. At the end of the day we have saved them money, and made them technically savvy without the upfront burden on infrastructure expenses.
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