SaaS Revenue to Top $12 Billion, Grow 21 Percent, in 2011

Gartner projects worldwide SaaS revenue to reach $21 billion by 2015.

Revenue generated worldwide from software-as-a-service (SaaS) is expected to top $12 billion in 2011 and grow to some $21 billion by 2015, prodded by tighter technology budgets, familiarity with the model and the growth of cloud computing , according to data compiled by researcher Gartner Inc.

By comparison, Gartner measured global SaaS sales at about $10 billion in 2010. The researcher defines SaaS as software owned, delivered and managed remotely by one or more providers, consumed in a one-to-many model on a pay-as-you-go or subscription basis.

"After more than a decade of use, adoption of SaaS continues to grow and evolve within the enterprise application markets," said Tom Eid, Gartner research vice president.

"This is occurring as tighter capital budgets demand leaner alternatives, popularity and familiarity with the model increases, and interest in platform as a service (PaaS) and cloud computing grows," he said.

Gartner said that the growth of cloud computing, of which SaaS is the application layer of the architectural stack, is pushing revenue for the model higher. The researcher said that up to 75 percent of current SaaS delivery can be seen as cloud services when measured by revenue, a figure that could climb to 90 percent by 2015.

"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," Eid said.

Customer relationship management (CRM) remains the largest single SaaS market, with revenue expected to reach $3.8 billion in 2011, up from $3.2 billion in 2010, according to Gartner. The researcher said that it projects SaaS to account for about 32 percent of the CRM market's total software revenue in 2011.

SaaS revenue within the content, communications and collaboration (CCC) market could exceed $3.3 billion in 2011, up from $2.8 billion in 2010, Gartner said. SaaS represents more than 80 percent of Web conferencing in terms of revenue generated, the researcher said. About 7 percent of enterprise resource planning (ERP) revenue is attributed to SaaS at about $1.7 billion in 2011, a slight increase from the $1.5 billion recorded in 2010.

"The market landscape for on-demand CRM continues to evolve and mature as the availability and use of SaaS solutions become more pervasive," Eid said.

Greater market competition and increased focus on megavendors reinforce the legitimacy of on-demand solutions, mitigating initial objections about security and availability for many, as acceptance of SaaS as a viable model for enterprise computing services grows,” he said.

TAGS: cloud computing,SaaS,CRM,Gartner,revenue

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