The rising popularity of Software-as-a-Service (SaaS) model is fast beginning to pinch traditional software vendors and is quickly becoming a serious threat to the conventional way of application delivery.

According to the recent reports by market research firm Forrester, currently there are more organizations, willing to experiment with SaaS than ever before. Forrester’s last year’s survey of 410 application software decision makers at many large and mid sized enterprises spread across US and Europe revealed that a majority of them are interested in the model with many currently using and some planning a pilot SaaS project.

So what is it that’s prompting this proclivity towards SaaS?

"It’s sheer frustration! Frustration with existing IT set up that is driving organizations to consider SaaS. The conventional approach to application acquisition isn’t doing the trick for many of these companies. It is not agile enough to quickly adopt new software and is not keeping pace with their ever-evolving business needs," said Ray Wang, principle analyst, enterprise applications/ tech industry strategy, Forrester.

Speaking further Wang said, "In addition to having a comparatively smaller footprint, a solution acquired via SaaS usually fits in almost every capital budget and the approval process of most organizations. IT managers don’t need to run to their CEOs or the board every time they make a decision. SaaS essentially frees the business from the IT decision making."

Skeptical About Saas?
However, all is not well in the SaaS land. There still remain issues such as flexibility and performance that linger in customer minds when contemplating SaaS. Issues such as integrating SaaS applications with existing in-house applications, customization, and security are some key challenges that many prospective customers continue to worry about.

Though SaaS has matured beyond many customization and integration glitches from its early days, many feel that there is still some scope for vendors to offer solutions that work seamlessly with multiple third-party technology solutions and other add-on apps.

On the adoption front, research has shown that currently it’s the North American market that leads the SaaS race, but the European and the APAC regions are beginning to catch up too.

Elaborating on the possible reasons for this trend, Wang said, "The primary reason for American enterprises to use SaaS is their frustration with the IT budgets. They are under tremendous pressure, more so than perhaps their European and APAC counterparts, to do more with less resources both financial as well as IT."

APAC Expected To Be The Biggest SaaS Buyer
However, in the longer run, APAC is expected to be the biggest SaaS buyer for a variety of reasons. One of the main reasons for this is that as opposed to the North American or the European market, organizations from the APAC and in particular places like India do not posses a whole lot of legacy infrastructure that will need to be integrated with SaaS based applications. Another reason is the burgeoning SMB/ SME segment in APAC which has emerged as the biggest buyer of technology.

For now though, Wang believes that taking a cautious approach to SaaS would be the best idea.

According to him, "Firms looking to invest in SaaS should do so with caution as vendors are yet to work out integration, licensing, support and maintenance issues."