Report Reveals SaaS-Based Services Edging Out On-Premise Solutions in the Global ECM Market


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Article ImageThe SaaS-based ECM market growth will outpace the premise-based ECM software market into 2018, according to a report from TechNavio. The drivers for the market trend are based on the economics of SaaS offerings and the inherent advantage SaaS has over premise-based software in reducing total cost of ownership.

"One of the major findings from our report is that the continually increasing growth rate of the ECM market year on year is an indication that numerous organizations are implementing ECM as a means to improve productivity," Faisal Ghaus, VP of TechNavio, says. "Another interesting finding from the report is that numerous organizations globally are increasing their global footprint. With this expansion comes a corresponding increase in the amount of data that is generated within an organization, which again leads to an even greater need for ECM."

SaaS ECM is a model used for delivering ECM as a service, wherein the solution is hosted in the cloud and accessed through a browser. The solution is deployed and managed by cloud service providers while end users are able to use the service on a pay-per-use model. An on-premise solution consists of the various constituents of ECM being hosted at the client's location and not through any cloud services.

Ghaus notes one of the key advantages of a SaaS model is that the client can use exactly what services are required for his specific application for the duration he requires it. "In such a case, a SaaS-based model allows the client to select exactly what he wants for the application and to pay for just that service," Ghaus says. "This is especially useful for a small or medium-sized organization that wants all the benefits of an ECM solution but is not in a position to pay the overall cost for an on-premise solution."

According to Ghaus, the growth of SaaS-based ECM solutions is a result of the increasing number of small and medium enterprises that are implementing ECM. "The number of these enterprises, as well as the overall volume of data expected to be created over the next decade, will certainly ensure that SaaS-based ECM will witness a high growth in the later years," he says.

Barrie Hadfield, CTO of Workshare, which provides enterprise collaboration applications, says the need to have greater control over how corporate information is stored, accessed, and shared has become a top priority for most businesses. "Being able to work on-the-go from a mobile device-whether it's a laptop, tablet, or mobile phone-is becoming increasingly necessary as remote working becomes an inherent part of modern working life," he says. "Cloud-based file share and sync solutions (like Dropbox) have emerged to fill this need; the challenge is, they've been designed for the consumer and simply can't meet the enterprise's stringent security requirements."

Patrick A. Harper, CIO at OpenText, says the results of the previously mentioned study are not surprising. "SaaS-based solutions have been gaining ground for almost a decade now and the ECM market is no exception," Harper says. Key drivers for the SaaS-based ECM market include a need for effective management of corporate data and compliance with regulatory requirements.

Hadfield shares that research by AIIM and Workshare, which polled more than 80,000 AIIM community members, revealed that there is a strong market need for cloud-based enterprise solutions that extend on-premise ECM systems for synchronized and secure collaboration. "Numerous organizations have tried to steer employees away from these solutions, encouraging them to use the enterprise content management (ECM) and document management systems (DMS) that they know are secure and have invested heavily in," Hadfield says. "The problem with these solutions, according to 60% of knowledge workers, is that they often lack the necessary cloud and mobile support that users want and need.

"On the one hand, you have modern cloud-based file sharing applications (albeit unsecure) that users love and are familiar with. On the other, you have enterprise-grade ECM and DMS systems that businesses require, but often do not make content accessible from a mobile device or provide the collaboration functionality employees today require," he says.

Given the need for more agile ECM systems that extend beyond the firewall and into the cloud, organizations should look at how they can tailor legacy systems for a new, modern era of collaboration and file sharing. "Bringing cloud into the mix is an obvious first step. And with security at the top of IT's priority list, the majority of enterprises are looking toward hybrid cloud solutions that let them choose exactly where their data and documents are kept," Hadfield says. "They could choose to store data in their own country, for instance; or for even higher levels of control, store it in their own data center. Hybrid cloud gives control back to the organization, while at the same time provides users with a more flexible ECM system."

Of course, when bringing cloud to legacy systems, a common concern is that it will create yet another repository for content, introducing even more silos that IT will then have to manage. The ability to align on-premise systems will be crucial here, and organizations can do that by using third-party cloud extensions for the on-premise system or deploying a stand-alone cloud system that offers a range of on-premise connectors.

Integration with existing ECM and DMS will allow employees to collaborate with teams and external parties without leaving the secure DMS or ECM environment, satisfying IT's need for complete data security and control and leveraging existing investment in these solutions. For an ECM vendor, the results show that there is an increasing demand for SaaS-based solutions, including more cost-effective solutions for the small and medium businesses, especially in the initial stages. At a later stage, these very same customers may opt for an on-premise solution once they find that they have a requirement for all the components of ECM. 

Harper says ECM vendors must offer solutions that are SaaS-based to maintain viability into the future and that regulatory compliance and certifications are key to establishing a foundation of trust to potential buyers. "The technology behind those solutions has to be cost-competitive to meet the demands of the market, and the solutions have to be architected and operated in a manner that reflects the security needs of large enterprises and key verticals," he says. "Meeting regulatory compliance and industry certification requirements are also key to viability. If SaaS consumers aren't convinced that their information is secure and confidential, SaaS offerings are not likely to be considered as effective solutions." 

Hybrid-based ECM solutions offer a solution to organizations that are not entirely comfortable with storing their data on the cloud, especially those of a sensitive nature. "A hybrid cloud-based ECM is seen as an emerging opportunity for organizations that want to place some content in the cloud without compromising the security of the organization," Ghaus says. "There is still some speculation on how secure the cloud is, and in this respect, many companies would rather ensure that critical data is not hosted on the cloud. In this respect, in a hybrid model, the critical data can still be with the client while the non-critical data can be stored on the cloud."

Organizations are still in the early stage of this shift as much of the focus of organization has been on private cloud and virtualization. However, some organizations are planning to run their own data centers in order to move all of their mission-critical applications to the cloud. "In addition, hybrid ECM is suitable solution for cloud-based applications such that mobile users can enhance collaboration without disturbing existing production applications," Ghaus says. The SaaS-based ECM market is expected to grow at a little more than 30% for the next 5 years, which Ghaus admits is moderately high growth, especially when considering that the on-premise ECM market is expected to grow at a little more than 10% over the next few years.