British and French companies have a significant lead over their German counterparts, in terms of adopting software-as-a-service (SaaS) applications.

In its "User Survey Analysis: Usage Plans for SaaS Application Software, France, Germany and the UK 2009" report, Gartner found that 71 percent of French survey respondents revealed their organisation currently uses SaaS for business applications, compared to 68 percent in the UK and 45 percent in Germany.

The fact that France is leading is somewhat surprising, as it runs slightly counter to the traditional assumption that the UK is more advanced in terms of SaaS adoption.

"France is only ahead by couple of percentage points, so it is not a massive difference to the UK," said Chris Pang, principal analyst at Gartner. "In France, the high adoption rate is probably explained as there are a few more local vendors offering SaaS solutions."

"Typically it depends on region, but it is usually small scale accounting solutions in France," he added. "Some are large enterprise plays, such as procurement, but others are local accounting solutions, typically used by SOHO type businesses."

The Gartner research surveyed 99 IT and business leaders in France, Germany and the UK in the third quarter of 2008 as part of a larger global survey to better understand plans for SaaS in 2009. Pang told Techworld that the respondents were split across companies in the SOHO, SME and large enterprise sectors, but it was likely that most were most in the mid market area.

Pang was not overly surprised at the low 45 percent figure for Germany. "One of the things that can affect this is the availability of native SaaS applications in the local market," said Pang. "The UK has usually done well because most of its SaaS apps are from North America. Translating these applications into German and other non English languages, means more localisation is needed."

Gartner also said that the responses from German organisations suggest that the difference in adoption levels will shrink if users follow through on their plans for SaaS adoption during 2009.

But won't the economic downturn impact possible adoption levels in Germany?

"Well, there is a yes and no answer to this," said Pang. "The economic downturn will de-accelerate purchasing of any new software, without a doubt. But SaaS is more resistant as it is normally paid out of operating budgets, and not capex."

"There is usually less upfront cost associated with SaaS," he added. "That is not to say there will be no slowdown, but slowdown in SaaS will be less than other enterprise software."

And it seems that CRM is the most popular SaaS application in all three countries, ahead of enterprise resource planning (ERP); content communications and collaboration (CCC); and supply chain management (SCM).

"CRM is one of the most common SaaS applications, but others such as web conferencing, e-learning, hosted email (which has existed for years and years) also lend themselves to a SaaS setup," said Pang.

Gartner thinks that CRM's popularity is likely a result of the media exposure of high-profile vendors such as salesforce.com, as well as the fact that CRM SaaS applications tend to cover a wider range of functions in common processes, such as sales automation, marketing automation and customer service support. SaaS applications such as ERP, CCC and SCM on the other hand tend to focus on specific areas of business process support such as expense management, talent management, recruitment, web conferencing and procurement.

So what can we expect for the rest of 2009? Well Pang said Gartner is planning to publish its latest SaaS forecast later this month, but he feels that we are likely to see slower adoption rates because of the slower economic climate. That said, he does not feel there will be a standstill, and there will still be movement in the market-place. "SaaS has lot more reoccurring revenues associated with it," Pang said.

The survey respondents were also pretty clear over their motivations for using or considering using SaaS in 2009. Most agreed that they choose SaaS primarily because they considered it more cost-effective than an on-premises application. Other reasons given included ease of deployment and internal resource constraints.

More than 50 percent of survey respondents saw SaaS as a viable alternative to an existing on-premises solution, and 40 percent saw SaaS as a complementary addition to their IT environments.