Saugatuck: SaaS in Finance: Mainstream, Growing, and Poised for Growth

More evidence from Bill McNee's excellent SaaS research firm, Saugatuck, that SaaS momentum is continuing to build in the finance department.

In a major new report coupled with extensive research on SaaS in finance, just released, the analysts at Saugatuck found:

Finance executives are much less happy with their current on-premise systems’ abilities to meet important business goals. There is a gap between existing systems’ abilities to meet important business goals; and just as clearly, SaaS solutions are seen as a much more attractive and viable alternative.

So while finance executives are unhappy with their current financial applications and expect that SaaS will be a lot better. This isn't just a hope, it's based on experiences they are already having with SaaS, as Saugatuck notes:

Finance executives see broad-based value in the use of SaaS across both tactical point solutions and core finance systems, functions and roles. Nearly sixty percent of Finance executives indicated that their firms are using SaaS for mature business applications categories such as Payroll.

And it's driving more and more finance departments to adopt SaaS, which is exactly what we are seeing at Intacct:

While starting from a much lower account penetration base, SaaS adoption into key financial functions and processes will experience explosive growth of 40 percent to more than 100 percent by the end of 2010.

Saugatuck's bottom line couldn't be more clear:

As a result of Finance executives’ dissatisfaction with current systems, and market conditions that favor the acquisition and use of SaaS over many traditional, on-premise solutions, Saugatuck believes that arguments being made by many leading, legacy on-premise providers (and industry pundits) that customers will “never” swap out and upgrade their core financial systems – whether SAP, Microsoft, Oracle, PeopleSoft, JD Edwards, Sage and the like – is, at best, optimistic. If alternative solutions such as SaaS are seen by existing customers as providing more value at lower cost, then these legacy systems (and their vendors) face significant market share losses at best.

You can read the overview of the report here: “Great Expectations: SaaS Strategies in the Finance Organization”