Analyst decries lack of B2B SaaS offerings

Companies selling goods and services online are increasingly relying on software as a service but the software-as-a-service packages available now do not support advanced business-to-business functions , according to Gartner Inc.

In a report released this week, dubbed SaaS Impact on E-Commerce, the Stamford, Conn.-based research firm said SaaS lets companies add features to their Web sites, such as product reviews, product recommendations and social sales capabilities. They can also let customers click to call.

Gartner says although SaaS e-commerce software supports business to consumer applications, they do not support business-to-business requirements, such as quoting, lead management, proposal generation, and purchase order payment processes.

“So if you’re selling a complex product like a set of network routers that require a rack and certain attributes that need to be configured to ensure that what you are selling will actually work, that tends to be another set of functionality that’s not in software as a service e-commerce offerings,” said Gene Alvarez, vice-president of research for Gartner, who wrote the report.

The study also cited concern from IT managers who fear they would be held responsible for outages caused by services over which they have no direct control.

Another issue with SaaS e-commerce applications is which data is owned by the customer and which data is owned by the vendor. Although customers normally own the data associated with their sites, Gartner advises users considering SaaS e-commerce to ask the vendors whether they would claim ownership to aggregated customer data.

Alvarez said aggregating data lets customers know how well their e-commerce sites compare to those of their competitors. “But if I can identify someone else or they can identify me -- I don’t want my competitors to know how well I’m doing on the Web,” Alvarez said. “I want to make sure everyone else is in the dark, but I would like to have benchmarks for myself as to how I’m doing against a general average.”

Gartner advises users to run tests of SaaS to figure out how much they would pay, both over a three-year and five-year period. Some companies operating business to consumer sites use SaaS because it’s their only viable option, Alvarez said.

“You can’t have business of any kind today without having some sort of a www address,” he said. “It enables those organizations to get access to a more robust feature set than if they just tried to have a relative of theirs code up the site for them.”

Gartner predicts within five years, 90 per cent of e-commerce sites will use at least one software-as-a-service package, while 40 per cent of the sites will use a complete solution.

Alvarez said in 2006. he predicted 20 per cent of e-commerce applications would use SaaS by 2010.

“It looks like we’re on target for that,” he said.