Continued adoption of cloud-based software is making its mark on Australian organisations with the Software-as-a-Service (SaaS) delivery model reaching mainstream levels in software categories such as CRM, email and collaboration.

Research from local analyst firm Telsyte indicates SaaS penetration ranges from 19% to 63% across 25 different categories of enterprise software measured. This penetration rate includes businesses using the SaaS-only model as well as a hybrid SaaS and on-premise approach.

“The past decade has seen many cloud-based enterprise applications become available to Australian CIOs and business leaders,” says Telsyte senior analyst Rodney Gedda. “The top SaaS categories are enterprise social media, e-commerce, B2B integration platforms, and big data storage.” Telsyte expects this trend  to continue with high intentions for many organisations to move CRM, ERP, email and groupware to the cloud within the next 12 months.

Telsyte research has found software investments will increase by more than 5% in 2014 after a few years of being on hold. Gedda says the growth in SaaS is in line with perceived costs savings achievable by taking the on-demand approach to software procurement.

He says most CIOs cite ‘cost’ as the most important factor when choosing an enterprise software solution, but ‘integration and interoperability’ remains a high priority which will grow in importance as enterprises rely on a mix of on-premise and third-party IT systems.

“The SaaS delivery model can work well for many organisations looking to reduce their IT infrastructure requirements, but CIOs must keep a close eye on data integration and sovereignty, long-term subscription costs and configurability of SaaS applications in addition to the popular privacy and security factors,” Gedda says.

The Telsyte Australian Enterprise Software Market Study 2014 is based on interviews with 324 IT Decision makers in organisations with more than 20 employees on their use of enterprise software – from application categories to ERP projects, custom development and Platform-as-a-Service (PaaS). The study also includes an analysis of the top eight enterprise software vendors, including their respective strengths, weaknesses, opportunities and threats. It analyses 25 enterprise software categories.