As the economic downturn shrinks budgets for supply chain IT investments, companies turn to smaller projects with fast implementations and on-demand delivery models.

This means that vendors have to be more flexible and creative in their go-to market strategies. Those that already have adopted a SaaS model appear to have an advantage, based on reports of corporate spending plans. In a recent survey by Gartner Group, Boston, nine out of 10 companies said they plan to increase their use of SaaS or on-demand solutions this year. More than a third plan to replace on-premises software with SaaS to bring down total cost of ownership.

Reduced cost of ownership is the big reason that SaaS is quickly gaining traction, says Clay Perry, Senior Vice President, Global Markets at Integration Point, an on-demand global trade management software provider based in Charlotte, N.C. "SaaS allows people to buy the drink, rather than buying or building the entire drink machine, " he says, adding that it also offers fast implementation and is less expensive to maintain and upgrade.

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