Having recovered from the excitement of the Software Satisfaction Awards 2008 ceremony, John Stokdyk looks at the big industry trend that emerged during the evening.

Some of the winners in the Software Satisfaction Awards [1] didn't exist when the scheme first started in 2006, but the successes of software as a service (SaaS) providers this year demonstrated that a new generation of business systems has well and truly arrived.

Last year's web-based accounting software winner KashFlow moved up a weight to triumph over Sage, QuickBooks and MYOB in the small business accounting category, while NetSuite achieved an impressive double in the mid-range and enterprise CRM categories. SaaS provider Really Simple Systems made it a clean sweep in the CRM section, while Octopus HR won the mid-range HR prize.

"We're a very new business and we're genuinely surprised we're here," said Octopus founder Geoff Burch before the ceremony. "We've only been going for the past 2-3 years, but we've got some extremely happy clients. You have to with software as a service, because if they're not happy, they'll stop paying you and go somewhere else."

The Software Satisfaction Awards are based on an online user survey that attracted more than 5,600 responses during the summer. The mechanism was devised back in 2006 before SaaS was a significant factor in the business software market, but one defeated on-premise developer referred to the "Amazon effect" as an explanation for the SaaS generation's strong showing this year. Online software users were more responsive to web-based surveys, he suggested.

There is some evidence from the results to support this assertion. Web-hosted accounting software emerged as the most closely contested category of all with 0.06 of a point (on a scale of 4) separating the nominees, all of whom rose to prominence in the past year. Almost as one, the web-hosted software houses said the ability to implement user requests quickly played a vital part in keeping them happy.

"We've still got relatively low overheads on the development side," said Geoff Burch from Octopus. "The SaaS model works well. You can develop quickly, test and deploy something in no time. You don't have to wait six months."

The accounting SaaS nominees e-conomic, Xero, Liquid Accounts and Pearl Office were also considered for the new BASDA-sponsored Newcomer of the Year category, but the judging panel awarded the prize to a company that occupies a category all by itself - the on-demand performance management and analytics developer Adaptive Planning.

While competing against the industry's megavendors SAP, IBM and Oracle, Adaptive has tripled its UK customer base during the past 10 months. Its overall share of the market was too low to qualify for this year's main BI shortlist, but if Adaptive continues to maintain its current user satisfaction levels, it will be a good bet for next year's BI and performance management prize.

Craig Sullivan, NetSuite's vice president for international products, was passing through London on the day of the awards ceremony and found himself picking up two of the three main Software Satisfaction Awards for CRM.

Streamlining business processes with SaaS, customer satisfaction and surviving the downturn are all associated in NetSuite's pitch. "This is the right time for [the SaaS] concept to really demonstrate what it can do in the market," he said. "With the economic downturn businesses are looking for ways to cut costs, increase efficiency and increase their ability to achieve customer satisfaction. Our message to finance directors is that software as a service - and particularly our business suite approach - will save you money.

"Credit is hard to come by and having visibility into the business is essential," Sullivan explained. "For example, it's critical not to overinvest in stock. If your warehouse team can be instantly notified of an order, they can get it out the door or source new stock when it's needed. Customer satisfaction is much greater - and keeping an existing customer is cheaper than finding a new one. You get a better competitive advantage."

Since the turn of the century, AccountingWEB.co.uk has documented the evolution of SaaS and played host to some epic debates about whether and when this new model of business computing will become the industry's next big thing.

In June, former BASDA CEO Dennis Keeling highlighted why accountants have held back from online accounting systems. The SaaS model is great for discrete applications like CRM, but is unsuitable for financial systems which rely on feeds from applications such as sales order processing, invoicing, purchasing and payroll, he argued.

"In the current tight economic climate few companies can afford to replace their systems completely. The market at the moment is for specialist add-ons that will integrate with existing legacy systems without disturbing the status-quo," said Keeling.

Remote servers are not well suited to link into complex in-house legacy systems, he argued, adding: "The idea of holding key financial data remotely still sends accountants hearts' into palpitations."

Voting in this year's Software Satisfaction survey confirmed the accounting profession's reputation for caution in IT matters. More than 50% of the mid-range HR respondents used online systems, with the figure rising to 75% in the talent management category. In the CRM section, 60% of SME respondents used on-demand CRM software and more than one-third of respondents in both the mid-range and enterprise CRM categories were SaaS users. In contrast, the number of online accounting software users made up just under 10% of the accounting & finance sample.

Yet this benchmark is a critical tipping point for the new software generation and represents a 30% increase on last year's accounting SaaS population. Though they represent different perspectives on the issue, both Keeling and NetSuite's Craig Sullivan agree that finance is the information switching yard through which data needs to travel if it is going to benefit business performance. With the HR and CRM communities strongly in the SaaS camp, accounting and finance is going to be the focus of the online software industry's next big battleground - and it's likely to occur in the next couple of years.

There is another big polling process taking place as this article is being written. As US presidential candidate Barack Obama likes to emphasise, you can only resist generational changes for so long. The voters in the Software Satisfaction Awards 2008 have already shown their allegiance.