ECONOMIC DOWNTURN TO BOOST SOFTWARE AS A SERVICE

• BIW survey suggests low upfront cost and reduced risks associated with software as a service (SaaS) makes it more attractive in a sluggish economy
• These benefits will cause annual revenues of UK SaaS sector to double to £2.5 billion by 2011

31 March 2008

A survey published today by leading UK-based software-as-a-service (SaaS) provider BIW Technologies (BIW) suggests that the worsening economic downturn could help the SaaS sector double its annual revenues in the UK to £2.5 billion over the next three years to 2011.

SaaS is one of the most exciting and fastest-growing parts of the software sector. Analyst firm Forrester Research said that adoption of SaaS increased by a third last year in large companies, while specialist investment bank Triple Tree recently said that SaaS "has grown beyond a mega-trend to cause major disruption to the status quo in the software industry".

The survey by BIW Technologies covered over 300 senior IT directors and managers at a range of companies spanning sectors from financial services to property and construction, travel, hotels, utilities and insurance.

Over 65% of respondents thought that the current economic difficulties would help accelerate the pace of adoption of SaaS, identifying three main reasons: it is quicker to implement, less costly overall and requires less up-front investment.

In tougher economic times, companies want to shed the extra costs and risks inherent in large, long-term IT implementation projects. Software delivered as a service is rented by users rather than owned, and can therefore be switched on and off at short notice. This reduces the upfront payment, smoothes costs, and reduces implementation risk. 

These advantages mean that SaaS is being used by companies in a growing number of areas such as customer relationship management (CRM), document collaboration, web conferencing, enterprise resource planning (ERP) and human relations functions.

Almost 70% of respondents thought the proportion of their overall software needs that would be provided by SaaS would at least double over the next five years, from around 15% currently to over 30%. Also, some 40% of respondents now said that they were 'very aware' of SaaS and that their awareness had increased significantly over the past two years.

In terms of the main benefits of using SaaS, which is prompting its wider adoption, some 70% of respondents cited four main advantages:

• helps to reduce in-house IT overheads
• upgrades to new future versions are easier and carry less risk
• SaaS can be deployed more easily throughout the supply chain
• it is quick to deploy and more able to meet changing needs.

Another benefit cited was use of SaaS in compliance. With the applications and data being securely hosted by a specialist third-party, organisations are effectively transferring a key business risk, while still enabling their auditors to have access to complete audit trails, showing who did what and when.

The construction and property sector has been an enthusiastic adopter of SaaS, because of the collaborative advantages that a SaaS-provided IT platform provides, and because of the savings in carbon emissions and wastage it offers. Currently, the UK property industry accounts for nearly one-third of all waste produced by the economy.

Over 50% of respondents said that SaaS was particularly useful to support collaboration in big, complex projects. For example, SaaS tools allow a dispersed team of architects, designers, contractors, suppliers, etc working on a project to reduce carbon-producing activities such as document printing (as all documents are distributed online), travel for meetings (using SaaS tools such as Webex), as well as reduce design inefficiencies and waste.

Paradoxically, some 30% of the respondents believe that UK companies lag behind their counterparts in other parts of Europe, the US and Asia in their use of SaaS, when, in fact, the opposite is the case. While this may be true in some market sectors, in others – notably construction collaboration – the UK has world-leading expertise.

The main issue regarding SaaS identified by the survey was security. About 70% of survey respondents thought that SaaS was potentially more of a security risk than traditional software because it is hosted online and could be subject to hacking. 

When asked to name specific threats to data security, however, more than two-thirds cited the traditional problem of moving blocks of data around, whether by printing or copying it, or saving it to a laptop – risks that are greatly reduced by SaaS as there is no need to copy, move or re-save data.

If government departments such as HM Revenue & Customs had adopted SaaS, there would have been no need to send the details of 25 million UK citizens on two CDs to the National Audit Office, which happened towards the end of last year with the result that the CDs were lost in the post. The information could have been shared remotely between officials at the two agencies via secure connections to a central server.

Looking to the future, the key development for SaaS according to respondents was that, in contrast to the current situation where often systems on different platforms cannot easily exchange data and services with each other, SaaS vendors will provide platforms, all using the same protocols, which will allow seamless data exchanges, permitting data to be held in one or more highly secure and properly managed locations.

Colin Smith, CEO BIW Technologies, commented:

"I think it's clear from this comprehensive survey that more and more companies are recognising the benefits of SaaS to enhance their business and help cut costs in this challenging economic environment. There is also an increasing acceptance that using SaaS can help companies reduce IT-related risks, manage costs and respond more nimbly to changing software needs. In addition, it can materially reduce a business's carbon footprint.

"At BIW, we put security at the heart of our operations, and no software upgrade or new feature is added without all the implications for security being considered. The security of our clients' data is of paramount importance to us, and in eight years of operation no successful attack has been made on our system and no client has lost data. The security of our service means that there's one less thing for clients to worry about."

(www.biwtech.com)

For further information please contact:

Richard Evans/Kit Bingham (The Communication Group plc) - Tel: 0207 630 1411

About BIW Technologies

BIW is the European leader in web-based collaboration systems for the construction and property industry, measured by numbers of users, usage and volume of data. It has more than 100,000 users and is is supporting projects in more than 20 countries across Europe, the Middle East, Asia and Australasia. BIW customers include United Utilities, Sainsbury's, Marks & Spencer, BAA, the UK Ministry of Defence, the Wellcome Trust, Bovis Lend Lease, and Land Securities.

About Software as a Service

A research note from Goldman Sachs' technology group recently endorsed the argument that slower economic growth would boost SaaS. "The ability to quickly and easily turn on new applications with a significantly lower initial cost of ownership makes SaaS an attractive offering … these benefits are likely to be key in a slower economic environment where purchasers of software may be increasingly sceptical of significant upfront investments."

At an event at the Institute of Directors in 2008, Bill Gates, founder of Microsoft, said: "Modern business is about effective collaboration. Software over the internet allows partners to collaborate more effectively and to communicate better. This enhances workflow and improves communication, which leads to greater productivity."