champions of software as a service: how saas is fueling powerful competitive advantage

© 2014 IBM Corporation

January 2014

Champions of Software as a Service How SaaS is fueling powerful competitive advantage


*Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating competitive differentiation

**Source: Gartner Forecast: Public Cloud Services, Worldwide, 2011-2017, 4Q13 Update, Ed Anderson, Lai-ling Lam, Yanna Dharmasthira, et al., December 26, 2013

For more info, visit: ibm.com/ibmcai/saas

Cloud computing is a force for business growth and Software as a Service (SaaS) is a fast-growing segment within cloud

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Leading organizations are using cloud to gain competitive advantage

SaaS is a key growth segment

within cloud**:

The Worldwide SaaS market is

forecasted to grow at a CAGR of 20.2%

in 2012-2017, growing from US$18.2

billion in 2012 to US$45.6 billion in

2017

Compared to peers,

these leaders are*:

79% more likely to rely on cloud to locate

and leverage expertise anywhere in the

ecosystem

136% more likely to use cloud to reinvent

customer relationships

170% more likely to use cloud-based

analytics extensively to derive insights

http://www.ibm.com/ibmcai/saas



10%

36% 42%

12%

Respondent distribution

(Organizations that currently deploy SaaS, spanning six countries* and 23 industries)

To gain a deeper understanding of how organizations approach SaaS, we surveyed 879 IT and line of business (LOB) decision makers

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*To smooth possible geographic distortions, responses were weighted based on an IBM assessment of each country’s total IT spend.

**LOB functions surveyed: Marketing, Procurement, Supply Chain, Sales/Commerce, Finance, Customer Service, Human Resources and Legal

Source: IBM Center for Applied Insights Champions of Software as a Service: How SaaS is fueling powerful competitive advantage


C-level IT

Geography

43%

57%

Mature

markets

Growth

markets LOB VPs,

Directors,

Managers**

Role

C-level

LOB** 40%

40%

20%

Organization size

(# of employees)

10,000+

2,500 – 9,999

<2,500

IT VPs,

Directors,

Managers

Growth markets surveyed: Brazil,

China, India, South Africa

Mature markets surveyed: UK, USA




Though reducing costs is the #1 motivator for considering SaaS, the more common result is a gain in competitive advantage

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SaaS was shown to reduce total

cost of ownership (TCO) of

applications

Reduce TCO (vs. on-premise)

But, almost half of enterprises

are also gaining competitive

advantage through SaaS

Gain competitive advantage

41%

47%






To learn from the leading organizations, we segmented enterprises by level of SaaS adoption and competitive advantage

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Pacesetters (19% of the total) have the highest level

of SaaS adoption and are gaining competitive

advantage through these broad efforts

Challengers (41%) have adopted SaaS more

narrowly, but are gaining competitive advantage

through their existing SaaS deployments

Chasers (40%) are slower to adopt SaaS and gain

competitive advantage through it

Pacesetters

19%






Pacesetters (19%)

Collaboration

Customer experience

Time to market

Chasers (40% )

Reduced TCO

Application agility

Collaboration

Pacesetters primarily turn to SaaS to improve collaboration and provide a better customer experience vs. reducing TCO

How are Pacesetters gaining their competitive edge?

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Top three

motivators

Segment Challengers (41%)

Reduced TCO

Application agility

Decision making






Dispelling a myth, leadership isn’t achieved by LOB circumventing IT. Pacesetters show the strongest IT and LOB collaboration.

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Pacesetters surpass Chasers

The power of collaboration

SaaS strengthens the

IT and LOB relationship

Strong IT and LOB

collaboration on SaaS

selection and deployment

Strong IT and LOB

collaboration around

SaaS security

+79% 70%

39%

71%

36%

35%

24%

+97%

+46% Pacesetters Chasers






+227%

+113%

72%

22%

37%

In fact, Pacesetter IT and LOB see each other as strategic partners on SaaS

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Pacesetters surpass Chasers

Fostering strategic partnerships

IT respondents view

LOB as a strategic

partner for SaaS

LOB respondents

view IT as a strategic

partner for SaaS

Pacesetters Challengers

66%

31%

54%

Chasers






Pacesetters also align themselves around a cohesive, enterprise-wide SaaS strategy – another key component of competitive advantage

Strategic approach to SaaS

9

Has a mature and cohesive enterprise-wide SaaS

strategy

SaaS is a critical piece of enterprise cloud strategy

SaaS provider is a strategic partner/advisor

+129%

+207%

+300%

46%

18%

56%

31%

12%

28%

48%

Chasers Challengers Pacesetters % Pacesetters

surpass Chasers

71%

86%






Their approach enables Pacesetters to go beyond enterprise efficiency – achieving deeper collaboration, better decision making, and market agility

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Pacesetters are experts at using SaaS to increase self-service capability, optimize operations and improve application agility

Enterprise efficiency

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Increased self-service capability for applications

Optimized business processes and

workflows

Improved application agility (flexibly deploy and

implement solutions)

+185%

+136%

+126%

36%

41%

41%

26%

31%

28%

70%

66%


surpass Chasers

74%

(% using SaaS to achieve to significant degree)






Real world example:

SafeGuard World

International

This top provider of managed payroll and employment outsourcing needed to

support an aggressive global expansion strategy.

It used a SaaS-based collaboration, knowledge-sharing and social project

management solution that enables its worldwide teams to respond more

quickly and effectively to fast-breaking issues and opportunities.

Result: 20% reduction in implementation time

Pacesetters also use SaaS to increase collaboration and improve core business relationships across their organizations and ecosystems

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Deeper collaboration

Increased collaboration across organization and ecosystem

Improved core business relationships

+79%

+154%

37%

44%

34%

28% 71%


surpass Chasers

61%







Real world example:

PAC2000A

An Italian retail giant needed to overhaul its manual price management system in

order to keep up with the competition.

It implemented a SaaS-based price optimization solution, which offered frequent

analytics on cost and competitive data. This changed PAC2000A from an

organization that based pricing decisions on “gut feel” to one that leverages

analytics to make more informed decisions and predictive forecasts.

Result: 2.4% increase in comparable store sales

SaaS enables Pacesetters to convert big data into new insights and improve decision making

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Better decision making

Leveraged analytics across organization

to turn big data into insights +112% 50% 34% 72%


surpass Chasers

Achieved better decision making +157% 41% 28% 72%







Finally, Pacesetters employ SaaS to unlock market agility and become more responsive to market and customer needs

Market agility

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Increased innovation

Reduced time to market

Improved customer experience

+128%

+127%

+137%

40%

42%

47%

71%

68%

Challengers Pacesetters % Pacesetters

surpass Chasers

66%


Changed organization’s business model +137% 44% 71%

Real world example:

Virgin Atlantic

A major carrier – with more than 9,000 employees, 41 aircrafts and carrying

5 million passengers/year – wanted to redesign its website to be more user-friendly.

It used a SaaS analytics solution to aggregate historical and current site usage

data to understand customer use and decision making, as well as gain insights

to transform the website. The airline has gradually released new pages and

continued to refine the site based on customer data.

Result: 10% increase in flight bookings, 7% increase in average booking value

29%

30%

30%

Chasers

30%






Want to hone your own competitive edge through SaaS?

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Set ambitious objectives

Consider the full range of

benefits that SaaS could

help you attain.

• Where can you speed application

deployment and implementation?

• Which business processes could

be better optimized?

• How could broader, smoother and

more frequent collaboration inside

and outside your organization

improve results?

• Which teams could do a better job

by leveraging big data to inform

decision making?

Take a more strategic and

collaborative approach

Incorporate your SaaS

initiatives within an

enterprise-wide cloud strategy.

• What elements would round out

your current SaaS strategy?

• How could you better integrate

SaaS strategy into a broader

cloud strategy?

• Are you exerting just the right

amount of control over SaaS

deployment?

• What changes are needed to

keep your governance structures

current?

Broaden your collaborative

base

Multiply your chances of

success by encouraging close

IT and LOB collaboration.

• Are you leveraging the best minds

of IT and LOB for SaaS selection

and investment decisions?

• Where else could IT and LOB gain

from each other’s perspectives

and resources? SaaS

deployment? Security?

• How can SaaS help you tap

valuable expertise beyond your

organization?






To learn more about the study, please visit

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ibm.com/ibmcai/saas





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