Within SMBs the larger cloud trend is towards deeper use of SaaS

Techaisle’s cloud adoption trend data shows that within US SMBs the SaaS penetration increased from 27% in 2011 to 58% in 2014 and reached 73% in 2016. It is expected that the figure will reach 94% by the end of 2017. Unweighted data analysis shows that SaaS adoption within US SMBs is already at 86% and will likely reach 96% adoption within the next one year. Even at the worldwide level, survey data shows that 76% of cloud-SMBs are currently using SaaS applications.

This view of SaaS as a deepening force within the SMB market raises an important, related question: what is the current benchmark for SaaS within SMBs? How many SaaS applications are in use today? And how many new applications are expected to be added?

Techaisle survey data shows that midmarket firms are using an average of two times as many SaaS applications within their organizations as small businesses. The future plan data indicates that this gap will begin to narrow. All employee size categories from 1-9 employees to 100-249 employees anticipate at least a doubling in the number of SaaS applications used within their organizations and within small business as a whole, plans call for a 140% increase in small business SaaS use. Findings for midmarket firms, while less dramatic, are nonetheless extraordinary enough to capture the imaginations of IT marketers: this group is showing an expected increase of 80% over current usage levels.

There is likely some theoretical limit on the number of cloud-based applications that can be usefully deployed within an SMB, but it is a much higher threshold. Businesses in general, and SMBs in particular, have a large number of poorly-automated or un-automated tasks and processes which could be meaningfully improved by the use of focused, low/variable cost SaaS applications.

Drilling down into survey data reveals that newer SaaS application categories for adoption are emerging within SMBs. CRM, supply chain management, inventory management, marketing automation, customer service, ERP, and vertical applications are at the top of the “planning” list. These categories share an important characteristic: each not only addresses a common SMB business need, but works best when the system is accessible beyond the walls of the firm deploying the application, capitalizing on a key advantage of cloud vs. on-premise systems. Similarly, analytics, another top SaaS application on the planned list, extends the automation of an important internal function by taking advantage of both (relatively) low-cost SaaS alternatives to on-premise software and the reach of the cloud beyond the corporate perimeter.

The upside for SMBs is that cloud is the agility platform for businesses today and SaaS offers a zero-friction option for automating for new processes.