SaaS is gaining a lot of ground among companies looking for lower-cost ways to deploy and manage a variety of business applications. SaaS, often referred to as on-demand software, is simply a different way in which software is developed and delivered. In this case, a third party hosts the software; users pay a monthly fee to access the features of the software on a service basis rather than investing in an onpremises infrastructure to support the application. It can be a low-cost way for businesses to obtain the benefits of commercially licensed, internally operated software without the associated complexity and high initial cost. Many software manufacturers are beginning to offer their applications based on the SaaS concept, with SaaS versions of CRM (customer relationship management) software (e.g. Salesforce.com), in particular, finding a high degree of acceptance by the business community.

SaaS versions of ECM applications, on the other hand, have been somewhat slower to catch on. According to a 2007 Gartner study, only about 3% of the roughly $2 billion ECM industry is using SaaS. At least part of this is attributable to the fact that much of the information contained in content management systems (i.e. general ledgers, balance sheets, purchase orders) is especially sensitive, as well as being vital to company operations. Many companies are wary about storing this valuable content outside of their organizations and having it managed by third parties.

That said, the demand for ECM SaaS applications is on the rise, especially with small to midsize businesses. According to Nucleus Research, 12% of the companies it surveyed in 2007 are considering adopting on-demand content management applications because they are faster, cheaper, easier to deploy, and provide businesses with greater flexibility than traditional on-premises solutions. With the continuing growth in the volume of electronic information, the introduction of new online collaboration techniques, and the increasing need to comply with tighter regulatory requirements, more organizations are starting to look at affordable SaaSbased solutions to meet their content management challenges.