SaaS Spreading Beyond CRM

CRM may be the largest Software as a Service (SaaS) market, but it is by no means the only one. If current trends continue, it may well lag behind the new software sectors moving to adopt the SaaS model.

One hot sector is compliance management, which is now the second largest SaaS market segment, according to a research note by Gartner (NYSE: IT) .

Procurement, document management, enterprise resource planning (ERP) and e-commerce are other functional areas increasingly being delivered as on-demand services, the research firm found.

Navigating Dangerous Waters

The report, "Adoption of Software-as-a-Service Is Happening Outside of CRM," noted there were many reasons why compliance management, in particular, is well suited to this delivery model.

For starters, the regulations often change, making it necessary to upgrade a system every time this happens. Also, ever since Enron and the passage of the Sarbanes-Oxley Act, companies have been highly motivated to avoid even the appearance of improper record keeping.

"The Software-as-a-Service model is a superior alternative to traditional on-premise solutions, making this type of integration scenario a reality," said Scott Berkey, CEO of Axentis, one of the four companies examined in the report.

"Leveraging the SaaS model, Axentis is able to ensure that all of our current and future clients can manage these dangerous waters and achieve their business goals," he said.

Beyond Compliance Management

Other sectors of the software industry are becoming SaaS'ed as well. Indeed, it is clear that on-demand is penetrating highly specialized vertical markets, not only through independent software vendors (ISVs) -- such as IBM's (NYSE: IBM) partners -- but also as white label, or branded, service offerings.

LexisNexis U.S., to name just one example, recently allied with NetDocuments to offer its hosted document service to law firms and corporate legal customers as a new component of the LexisNexis Managed Network Services.

Specializing in CRM

The CRM on-demand industry, meanwhile, shows little sign of settling into a mature market adoption phase.

"Oracle (Nasdaq: ORCL) purchased Siebel in part to gain additional on-demand products, customers and expertise. SAP (NYSE: SAP) just announced their new on-demand CRM system earlier this month," Bob Conlin, CMO at Centive, a provider of an on-demand sales compensation management application, told CRM Buyer.

The on-demand CRM market will continue to grow, predicts Centive CMO Bob Conlin, and "the universe defined by CRM will expand to include new, high value on-demand solutions that extend CRM beyond its current boundaries."