Canada to catch U.S. in SaaS: IDC

For the past several years Canadian organizations have lagged behind the United States in using cloud-based software.

But new research from IDC Canada says that’s about the change.

“Canada will catch up with some aggressive adoption in the next few years,” says Nigel Wallis, research director for enterprise software and application solutions.

According to the company’s most recent surveys, 5 per cent ($428 million) of the total corporate and government spending in this country is on software as a service offerings, he said. By comparison, in the U.S. 9 per cent of IT spending is on cloud-based software.

However, by 2015 the amount of corporate spending on cloud software will be even in both countries at 15 per cent ($1.39 billion here).

Cloud software solutions include Salesforce, Google’s Gmail, Microsoft’s Office 365 and Cisco System Inc.’s WebEx.

Canadian organizations have had a lower adoption of cloud software solutions for several reasons, he said: The early leaders were American-based and worked U.S. markets first before offering service here. In addition, organizations here had concerns about the security of data and that personal data is held in the U.S., where law enforcement agencies could access it through the Patriot Act.

However the numbers suggest those worries – which Wallis says are “overstated”— are slowly melting away.

“We’re past the tipping point for cloud computing in Canada,” he said.

Remember that 5 per cent of current Canadian IT SaaS spend? That’s an average, Wallis pointed out. In certain verticals such as collaboration (like WebEx), CRM (like Salesforce) and human capital management (like SuccessFactors) the spending is “north of 30 per cent” already.

As Canadian organizations get experience with cloud computing their motives for choosing SaaS solutions have changed, Wallis added. They used to pick cloud solutions largely to save money. Now a key driver is cloud’s speed of deployment – with no on-premise installation and often minimal configuration, all end users need is a browser.

Positive experiences with small cloud solutions lead to larger purchases, Wallis said.

Still, surveys indicate that organizations here think twice about cloud software because of security and data residency (privacy) and data repatriation concerns, as well as integration, performance and availability.

The security-related concerns can partly be met through contracts with service providers detailing how data stored outside the country can be brought back here, Wallis said.

But also, experience helps.

“As we get more experience using the cloud what will happen is there may be the odd fairly big privacy debacle … but as organizations begin to use cloud as the fabric in their everyday lives, worries will diminish over time.”

 



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