SaaS revenue in enterprise app market to hit $9.2 billion in 2010

Worldwide software as a service (SaaS) revenue within the enterprise application software market is forecast to reach $9.2 billion in 2010, up 15.7% from 2009 revenue of $7.9 billion, according to Gartner.

The market is projected for stronger growth in 2011 with worldwide SaaS revenue totalling $10.7 billion, a 16.2% increase from 2010 revenue.

Gartner defines SaaS as software that is owned, delivered and managed remotely by one or more providers. The provider delivers an application based on a single set of common code and data definitions, which is consumed in a one-to-many model by all contracted customers anytime on a pay-for-use basis, or as a subscription based on use metrics.

“Initial concerns about security, response time and service availability have diminished for many organisations as SaaS business and computing models have matured and adoption has become more widespread,” said Sharon Mertz, research director at Gartner. “Usage and vendors’ on demand ecosystems continue to evolve to provide additional business and technology services, more-vertical-specific functionality, and stronger communities of partners and buyers.”

The composition of the worldwide SaaS landscape is evolving as vendors continue to extend regionally, increase penetration within existing accounts and “Greenfield” opportunities, and expand their solution offerings, either organically or through acquisition. During the past 12 months to 18 months, Gartner has observed shifts in how SaaS is sold, consumed and perceived by vendors and buyers.

“There is increasing involvement from executives in purchasing decisions, as well as greater participation from IT in the purchase process due to larger deals, the expanding footprint of SaaS in the organisation and a higher requirement for downstream integration as SaaS becomes incorporated in the enterprise business process,” Mertz said.

Additional shifts in SaaS have included an increasing number of organisations using a variety of SaaS applications from multiple vendors that were procured and deployed without participation from IT, creating management issues and challenges.

Also, SaaS deployments are becoming larger, with deals more frequently appearing in the range of thousands to tens of thousands of users within large organisations.
Social media and social software are becoming increasingly integrated with SaaS solutions, as social platforms such as Facebook and Twitter are leveraging customer service, sales and marketing initiatives. In contrast, recent research indicates that social software has the lowest adoption rate by buyers of SaaS solutions.

Content, communications and collaboration (CCC) continues to lead the enterprise SaaS market with worldwide CCC revenue on pace to reach $2.9 billion in 2010, followed by customer relationship management (CRM) revenue of $2.6 billion.

And for CCC technologies, SaaS use varies across the market segments. For certain markets such as ECM and search, SaaS is barely used at all, while for web conferencing, it is the predominant form of software access.

“Because SaaS and cloud are hot concepts in the market, many suppliers are rebranding their hosting or application management or application outsourcing capabilities as SaaS or are claiming their solutions are available ‘in the cloud.’ Much relabelling of more-traditional application outsourcing approaches is occurring,” Mertz continued.

“Suppliers run the risk of confusing and antagonising buyers if they persist in this approach. Organisations run the risk of getting nasty shocks when the thing they thought they were buying turns out to be something altogether different. Hosting and application management are not synonymous with SaaS, nor do they necessarily comply with the definition of cloud computing.”

The following two tabs change content below.


Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam dignissim magna vitae dui posuere eu feugiat augue eleifend. Fusce sed tincidunt quam. Donec varius aliquam metus ut semper. Donec augue purus, feugiat interdum malesuada vel, aliquet quis massa. Nulla facilisi. Nam vel ante quam, et tincidunt dui. Maecenas venenatis libero eu nulla tincidunt et accumsan velit sodales. Nam congue mauris et felis porttitor blandit. Nam eget tempor massa. Nullam suscipit gravida eros, ac suscipit magna feugiat sit amet.

Latest posts by admin (see all)