SaaS Maturity Model by Forrester

As SaaS became acceptable, various SaaS maturity models have been proposed. One of the widely quoted SaaS maturity model in public was proposed by Forrester research. The model has 5 levels.

Level 0: Outsourcing:

  1. Target: Large enterprises
  2. Dynamics: This simply is outsourcing applications to an outsourcing firm who runs these applications on a unique basis for the client. This level is generally applicable for large firms and is expensive than the SaaS model as the outsourcing firm cannot leverage the same application for any other customer.

Level 1: Manual ASP business:

  1. Target: Single packaged applications (requiring significant IT expertise) to several midsize firms
  2. Dynamics: At this level a hosting provider which is catering to various clients at a time provide them same core application but customizable to a certain extent for each one. Each client is provided a dedicated server running its instance of the application.

Level 2: Industrial ASPs:

  1. Target: Small and Medium businesses (SMB)
  2. Dynamics: At this level, providers with the help of IT management software are able to serve identical customer specific offerings to large number of SMB clients. The incremental change from level 1 is the cost reduction.

                                                                           Exhibit 1: SaaS maturity model


Source: Forrester

Level 3: Single-app SaaS:

  1. Target: Small and Medium businesses (SMB)
  2. Dynamics: Applications at this level have SaaS capabilities (web based user interfaces, delivered over internet, serving large number of clients with scalable IT infrastructure). Another characteristic of level 3 is low level of customization for end users.

Level 4: Business-domain SaaS:

  1. Target: Small to large enterprises
  2. Dynamics: SaaS applications at this level are advance and sophisticated to serve needs of business of various sizes and their specific business domain (e.g. complete customer care) requirements. At this level the vendor may also provide a platform for other business logics which can be integrated with previous SaaS applications (of level 3). The applications are also customized to suit requirements of businesses.

Level 5: Dynamic Business Apps-as-a-service:

  1. Target: Small to large enterprises
  2. Dynamics: According to Forrester “At level 5, advanced SaaS vendors coming from level 4 will provide a comprehensive application and integration platform on demand, which they will pre-populate with business applications or business services. They can compose tenant-specific and even user-specific business applications on various levels.” 

Presently, SaaS maturity level has advanced to level 4 where many applications targeting large enterprises have been launched but many of the SaaS offerings still remain at level 3.