SaaS appeal

The software-as-a-service model is proving especially popular for new categories of enterprise applications, such as human capital management. In fact, the majority of HCM vendors offer their applications as services via subscriptions as well as through traditional licensing.

SaaS is a popular way to deliver these new applications in part because companies are less likely to have a formal, centralized set of processes for tasks such as managing human resources and are therefore more open to adopting the software vendor's best practices, according to AMR analyst Christa Degnan Manning.

In addition, SaaS offers a less resource-intensive method for implementing a brand-new application, particularly for far-flung multinational companies.

IT executives may want consistency, and they believe that software can provide it. But they don't want to deploy and maintain different versions in different parts of the world, says Manning. "SaaS vendors don't get paid unless you actually use the software," she says. "So they want to help you get as many people as possible up and running on the application."