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

2

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

3

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

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

4

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%

Source: IBM Center for Applied Insights Champions of Software as a Service: How SaaS is fueling powerful competitive advantage For more info, visit: ibm.com/ibmcai/saas




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

5

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?

6

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.

7

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

8

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

10





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

Enterprise efficiency

11

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%


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

12

Deeper collaboration

Increased collaboration across organization and ecosystem

Improved core business relationships

+79%

+154%

37%

44%

34%

28% 71%


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

13

Better decision making

Leveraged analytics across organization to turn big data into insights +112% 50% 34% 72%


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

14

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?

15

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

16

ibm.com/ibmcai/saas




Technology

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