AMI-Partners: Home-Based Business Usage of Software as a Service Showed Explosive Growth Last Year

Cost Structure and Low-Maintenance Support Model are Prime Drivers

NEW YORK--(BUSINESS WIRE)--The number of home-based businesses (HBBs) in the U.S. using software-as-a-service (SaaS) nearly doubled during 2008, growing 92% to 2.3 million HBBs, according to New York-based consultancy, Access Markets International (AMI) Partners, Inc. On a gross spending basis, HBBs contributed 16% of the total SaaS expenditures by U.S. small and mid-market enterprises for the period. These findings were released following the completion of AMI’s survey of U.S. HBBs, which explores how U.S. HBBs are adopting a variety of SaaS applications, such as accounting/finance, contact management, data storage/back-up, and other applications sets.

“This reflects a generational shift. Today’s home-based business entrepreneurs are tech-savvy, having been reared in the Internet age. They are willing to invest in new technologies, which will help drive the HBB SaaS market opportunity”

“Today’s economic reality is driving businesses of all sizes to seek the most cost-effective and easy ways to use and manage IT solutions. This is especially true for HBBs that have bare-bones or no IT support. SaaS offerings fit the bill as HBBs look for solutions that are both appropriate to their needs and do not require significant upfront financial investment,” according to Sau Lam, a Senior Analyst with AMI-Partners. Ms. Lam added that “cost reduction is cited by HBBs in the U.S. as the number one driver for using SaaS followed by ease of installation and management.”

A variety of SaaS categories have gained traction in the U.S. Home-Based business market, demonstrating broad-based interest in hosted solutions as an alternative to on-premise software. Findings from AMI’s U.S. HBB study show momentum building around three key application segments:

• Business Productivity Tools: SaaS applications for foundational productivity tools, such as accounting/finance and contact management, are garnering an ever-increasing fan base.
• Collaborative Applications: The need to reduce travel time and expenses is driving demand for hosted Web conferencing, document sharing, and project management applications.
• Data Management Solutions: The need to better organize and make effective use of data is stimulating interest in online data storage/backup and data analytic/mining services.

SaaS vendors seeking to zero in on near-term sales opportunities will find a receptive market among younger HBBs, particularly those that have been in existence <5 years. 30% of HBBs between 2-5 years old and 13% of HBBs <2 years old are more likely to adopt SaaS than their more mature peers. “This reflects a generational shift. Today’s home-based business entrepreneurs are tech-savvy, having been reared in the Internet age. They are willing to invest in new technologies, which will help drive the HBB SaaS market opportunity,” says Ms. Lam.

Related Studies

AMI-Partners’ 2008-09: U.S. Home Based Business Market Overview – Impact of Economy: Changing Dynamics, Opportunities & Challenges report highlights major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI-Partners’ annual surveys of U.S. HBBs, the study track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to U. S. HBB market requirements.

In light of global recessionary fears and the impact of economic downshifts on business, AMI-Partners has expanded its tracking studies to include several questions pertaining to SMBs’ perceptions of their dependence on local, national and global economies as well as their expectations about economic growth. These questions gained added significance in light of the timing of this year’s studies, which overlapped with the global financial crisis starting in mid-September. AMI-Partners’ studies, thus, present an early picture of an SMB market undergoing a major transition. Given that many SMBs are at the leading edge of this transition, AMI-Partners has included an additional analysis in this year’s reports to assess demographics, attitudes, current IT adoption as well as planned IT purchases among “concerned SMBs” compared to the rest of the market. (AMI-Partners defines concerned SBs as those that expect the local/regional economy will get worse in the next one year and concerned MBs as those that expect the local/regional, national or global economy to get worse in the next one year.)

For more information about this study, AMI-Partners, or our global SMB research, call 212-944-5100, e-mail [e-mail] or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.