SaaS and Cloud adoption is on a rampage. The number of companies who will implement at least 4 SaaS/Cloud applications will double over the next two years.

This, as well as a number of other conclusions highlighted in the “2011 Application Connection Priorities” report from Gatepoint Research are expected, and should not be a surprise to anyone who has been following the market. It is a yet another strong validation of what I have seen in the market over the past 24 months.

Dig into the report data, though, and the responses to that question reveal a few key items that aren’t highlighted, but I feel are even more important.

SaaS Deployments – through the roof:
1) 65% of respondents already have at least one SaaS application in production. The typical company has an average of 2+ SaaS/Cloud applications today, and for those who have a SaaS applications running, they typically have 3-4 of them.

2) In two years, nearly 80% will have SaaS applications implemented, and the total number of such applications deployed will have increased by about 50%.
The “Hidden Growth Factor” for SaaS Applications

That’s a big deal. I suspect it understates the real growth in SaaS applications and Cloud data, though. Maybe by a LOT. I’ll go further than suspect. I know it does.

Why? Because it no longer takes “IT” to deploy a sophisticated application like CRM. I personally have “implemented” Salesforce.com and other SaaS applications like software defect (i.e. “bug”) tracking. You can too, I’m sure.

Essentially, any department or business unit can go out there, and in about an hour or less, create their own “Island of Information”.

It used to take months to deploy something like Seibel CRM and create a new Island. It takes minutes to “deploy” Salesforce. IT often finds out about it after it’s already a fait accompli. These new applications are not always “planned for” years – or even months in advance.

All it takes is a business unit manager or departmental director with a bee in his or her bonnet, and $25 a month per user in the budget. I’ve seen it happen. I know it happens, I’ve done it myself. Applications are sometimes reduced to the point of almost being an “impulse buy” – like when I go to Costco for a 96-pack of crushed tomatoes and somehow or anther end up with a new dual-core Netbook in my cart.

Loraine Lawson has written a number of excellent articles in this area, including “Is SaaS/Cloud Adoption Too Easy?”

Data Growth Headaches

The growth in SaaS is mirrored by the results of the “growth of data volume” question. The results are stated in the Observations section as “57% of responders indicate more than 25% growth in data volume over the next 12-18 months”.

I’ll state categorically that the results of the survey significantly understate the growth in data volume that these organizations will truly experience. This is based on what I’ve personally seen, and on other research I’ve read; however, simply based on this survey, it’s still huge. But I’d bet a paycheck that the average company will see increases of at least 40-50% per year for the next 3-5 years.

Delving into the data, the results to me seem far more significant than the ones highlighted in the Observations section. My key observations:

1) 93% of the organizations see data volumes growing in the next 12-18 months. I can’t help but think that the other 7% are either mistaken, misunderstood the question, or their companies are divesting divisions/subsidiaries which would naturally result in less data.

2) The 93% of companies envisioning data growth in the next 12-18 months expect growth in the area of 60+ percent on average.

What this says to me is that companies know that they’ll be experiencing tremendous growth in data volumes. And more and more of that data will be stored and processed “in the sky” on various SaaS and Cloud platforms.

More data, more sources. But that’s not the end of the story. No, those are the easy things to deal with. It gets a lot more complicated than that.

My next column which I will write sometime this evening will talk about additional complications that this report foreshadows, and why it’s clear that the nature of data and application integration must change as well.

Finally, if you think that Cloud & SaaS Integration isn’t something to be concerned about, take a look at the following graph I borrowed from In(tegrate) the Clouds. Graphs like this which show geometric increases as you move up and to the right should make IT executives concerned:

cloud_data_integration_jobs.jpg

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