Thirty Percent of New Customer Service and Support Application Investments Will Be Through the SaaS Model by 2012

Organizations are experiencing project savings of 25 to 40 percent by deploying CRM applications in a software as a service (SaaS) model, according to Gartner Inc. Gartner said that its clients were making these savings from reduced application expense and lower implementation costs.

Much of the savings that organizations are making is a result of a lesser dependence on large external service providers (ESPs), which typically help businesses improve customer processes as part of the CRM engagement but which play less of a role when SaaS is involved. Among the top 100 SaaS deployments in 2007 and 2008, fewer than 10 percent involved a large system integrator or an external enterprise business consulting team. This would indicate that the role of ESPs in designing, measuring and driving CRM process improvements will diminish at enterprises deploying SaaS solutions for CRM through 2012.

Gartner expects a similar drop in customer experience scores from midsize businesses. They're a stronger target for SaaS offerings, and they rarely use ESPs for business consulting skills.

Gartner said that many projects that involve complex customer service contact centers are reported to be "on hold" until better references are available from the large enterprise application vendors that are in the process of releasing a new generation of their products. However, SaaS is the deployment model of choice for an increasing number of projects.

Gartner predicts that all forms of SaaS-delivered customer service applications in the call center will grow by more than 20 percent per year through 2012, and this will deliver significant savings. By 2012, 30 percent of new customer service and support application investments will be through the SaaS model.

Because SaaS applications lack sophistication in BPM and process design, and due to the absence of ESPs offering business process advice, the growing spread of SaaS CRM applications threatens CRM efforts.

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