Conducted by independent market research company Vanson Bourne (vansonbourne.com), the survey asked questions to 100 senior IT decision-makers concerning SaaS adoption.

Another key finding is that two-thirds of organizations are aiming to adopt SaaS within the next five years, citing the fact that virtualization has made SaaS affordable as their reason.

SaaS reduces overall software license spending for larger companies, while helping smaller companies adopt enterprise-level software without the large upfront investment or the need to train staff to manage and monitor applications.

"A further 72 percent of companies are certain that SaaS will make their application usage more cost-effective because of the reduction in software management costs, and the ability to eliminate buying too many or too few software licenses," says Neil Barton, director of Hostway. "Furthermore, around half of all organizations believe that it will enable smaller companies to use enterprise-level software without the need for large upfront investment, or having to train staff to manage and monitor these applications. Given these benefits, it is unsurprising that two thirds of organizations are planning to adopt SaaS within five years."

Until recently, the adoption of SaaS has been hindered by many challenges. Forty-five percent of survey participants cited the lack of available virtualization technologies as the major reason why the technology has not been successful until recently.

Before the breakthrough of virtualization technologies, service providers were unable to offer SaaS affordably and reliably as an outsourced business service, which is supported by the survey's findings that about 71 percent of companies are not using SaaS today.

Many of these problems have now been resolved with 72 percent of survey participants are now confident that virtualization will drive SaaS adoption, and over half of the participants say that inexpensive bandwidth now makes SaaS more enticing.

Finally, many organizations believe that there is one last challenge involved in SaaS adoption, with 62 percent of organizations highlighting the lack of available SaaS-enabled applications as a key reason why many organizations have yet not adopted SaaS.

Last month, SaaS solutions provider OpSource hosted a webinar entitled "Softletter's annual SaaS Survey," which previewed new developments in SaaS and best practices of successful SaaS companies.