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Trend Radar 2008: SaaS in SME

Posted on Tuesday, Jan 8th 2008

We discussed the rise of On-Demand Software-as-a-Service (SaaS) in the enterprise as a 2008 trend.

However, SaaS will rise in the Small-Medium Enterprise (SME) markets as well.

Acc. to Jim Heeger, CEO of PayCycle, “There are something in the order of 22 to 25 million small businesses [in the US]. It depends on how you count them, but the vast majority of them are Mom and Pop businesses.

There are a total of 5.9 million business employers in the US; this is based on W2 filings. Of the 5.9 million, 5.2 million have fewer than 20 employees. The remaining 700,000 entities accounts for larger business employers. It is not a pyramid, it is a thumbtack; it is all at the bottom. That is where the action is because there are so many companies to deal with down there.”

This large pool of businesses have tremendous appetite for buying technology, but until recently, it was too expensive for vendors to sell into this market.

With the advent of SaaS, this dynamic has changed.

Finally, a pricing model, a delivery model, a support model, and a sales model – all are in place to offer technology to the millions of small businesses in the world.

And so, 2008 will not only be the year of SaaS in the Enterprise, SaaS will also permeate into the SME market. This is why, I have redefined Enterprise 3.0 to include SME in the equation.

Companies like Salesforce.com, Concur, Taleo, and the newly public Successfactors and Netsuite will all be the beneficiaries of this trend.

This segment is a part in the series : Trend Radar 2008

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