Global SaaS Enterprise Application Sales to Exceed $8.5 Billion in 2010

Researcher Gartner figures SaaS revenue within enterprise application software market will bump up 14 percent over 2009, based on convergence with cloud computing models and diminished security and availability concerns among business customers.

Global sales of software-as-a-service (SaaS) in the enterprise application segment will jump more than 14 percent to $8.5 billion this year when compared with the $7.5 billion generated in 2009, a spike attributed largely to the business community’s growing endorsement of cloud computing, according to data compiled by researcher Gartner Inc.

The researcher said that it expects worldwide SaaS sales in markets such as project and portfolio management (PPM), content, communications and collaboration (CCC), and customer relationship management (CRM) will grow steadily—albeit at varied rates--based on increasing customer demand and the suitability of certain applications.

As a business platform, off-premise software is shedding the security and availability barriers that have hindered its widespread adoption, latching onto the coattails of an impending upswing in the wider cloud computing market, the researcher said.

Gartner regards SaaS as one variation of cloud computing, consisting of the application layer of the overall cloud architectural stack. The researcher estimates that up to three-fourths of current SaaS delivery revenue could be regarded as a cloud service, and, by 2014, that figure might grow to 90 percent.

Although SaaS use has expanded to a broader range of applications and solutions, the deployment sweet spot still resides with horizontal applications with common process, among distributed virtual workforce teams and for Web 2.0 initiatives, said Sharon Mertz, Gartner research director.

“The popularity of SaaS has increased significantly within the past five years and initial concerns about security, response time, and service availability have diminished for many organizations as SaaS business and computing models have matured and adoption has become more widespread," Mertz said.

Gartner expects adoption of SaaS to outperform market growth through 2014, she said.

Researcher forecasts SaaS growth in PPM, CCC and CRM

In the PPM market, SaaS options are expected to push the overall market higher rather than cannibalizing on-premise sales, Gartner said. The researcher cautioned, however, that new entrants to the PPM market providing lower cost solutions may pare some on-premise growth.

Gartner said that, based on 2009 data, the CCC market exhibits the most noticeably disproportionate SaaS adoption rates—meaning overall market penetration is difficult to gauge--ranging from 4 percent for enterprise content management to 82 percent for web conferencing.

In the CRM segment, SaaS accounts for 24 percent of total market revenue, according to 2009 figures. SaaS is expected to represent some 26 percent of CRM market total sales in 2010, Gartner said.

"Greater market competition and increased focus by the mega-vendors reinforces the legitimacy of on-demand, mitigating initial objections about security and availability for many, as acceptance of SaaS as a viable model for enterprise computing services grows," Mertz said.

TAGS: cloud computing,SaaS,application,Enterprise,Gartner

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