Small Business SaaS - Why Small Businesses are Embracing SaaS

[fa icon="calendar"] Sep 4, 2017 9:10:00 AM / by Jim Barnish

Jim Barnish

Businesses large and small (but especially small) are boarding the SaaS train in droves when it comes to cloud tech.

According to recent surveys, SaaS penetration is the SMB Market in our country is actually expected to reach a whopping 94% by the end of 2017. This has increased from 27% in 2011 and 58% in 2014. So how exactly are SMBs using SaaS in today's market?

In a blog post, Techaisle analyst Anurag Agrawal notes that rising SMB SaaS cloud adoption leads to some interesting questions about the state of the market. How many SaaS apps are SMBs currently using? And how many more apps will they be using in the future?

According to the Techaisle survey, midmarket firms are using an average of two times as many SaaS applications within their organizations as small businesses. Looking ahead though, the research firm expects that this gap will begin to narrow.

Companies in the range of under 10 employees to 100-249 employees “anticipate at least a doubling in the number of SaaS applications used within their organizations and within small business as a whole,” Agrawal writes.

There will be a 140 percent increase in small business SaaS use, according to the survey. Midmarket firms are expected to increase SaaS usage by 80 percent.

“There is likely some theoretical limit on the number of cloud-based applications that can be usefully deployed within an SMB, but it is a much higher threshold,” Agrawal writes. “Businesses in general, and SMBs in particular, have a large number of poorly-automated or un-automated tasks and processes which could be meaningfully improved by the use of focused, low/variable cost SaaS applications.”

SaaS applications are often used to access and edit documents, and for storage, customer service and messaging. There are newer SaaS apps SMBs are considering, according to the Techaisle survey.

Customer Relationship Management, Enterprise Resource Planning, supply chain management, inventory management, marketing automation, customer service and vertical applications are all SaaS app categories that SMBs are planning to adopt.

“These categories share an important characteristic: each not only addresses a common SMB business need, but works best when the system is accessible beyond the walls of the firm deploying the application, capitalizing on a key advantage of cloud vs. on-premise systems,” Agrawal writes. “Similarly, analytics, another top SaaS application on the planned list, extends the automation of an important internal function by taking advantage of both (relatively) low-cost SaaS alternatives to on-premise software and the reach of the cloud beyond the corporate perimeter.”

Benefits of SaaS Cloud Deployments

SaaS is commonly known as “on-demand software,” “hosted software” or “web-based software.” SaaS apps are subscription-based and hosted in the cloud. With SaaS, businesses do not use traditional software installation, maintenance and management approaches, and cloud service providers are largely responsible for app security, availability and performance, Nerdio notes.

For SMBs looking to cut IT costs and responsibilities, SaaS can provide major benefits. Companies can avoid capital-intensive, on-premises software deployments (and associated network and server infrastructure costs). That can especially help small businesses that do not have the resources of larger firms.

SMBs can adjust their SaaS subscription on a monthly basis, “scaling consumption requirements up and down based on project demands and other variables.” Nerdio adds.

Those cost reductions also allow SMBs to free up in-house IT resources, allowing IT staff members to focus on tasks that are more central to the business.

Excerpt from "Small Businesses Are Embracing SaaS for Cloud Deployments, Survey Says", published in Biz Tech Magazine online. Read it here.

Topics: SMB

Jim Barnish

Written by Jim Barnish

Jim is a strategic change leader with over 10 years of global, focused and integrated operations, sales, finance and marketing experience.