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SaaS Market Growth According to Gartner

Gartner's May 7, 2009 report titled “Market Trends: Software as a Service, Worldwide, 2009-2013”, shows a continued climb for SaaS business applications. According to the report, the software as a service (SaaS) industry is estimated to grow to $8 billion in 2009, nearly a 22% increase from 2008 revenue of $6.6 billion. The analyst firm forecasts the SaaS industry to achieve steady growth through 2013 when worldwide SaaS revenue will reach $16 billion for the enterprise software markets.

“Adoption of the on-demand delivery model has grown for nearly a decade, but its popularity has increased significantly within the last five years,” said Sharon Mertz, Gartner Research Director. “Initial concerns about information security and service availability have diminished for many organizations. As SaaS business and computing models have matured, adoption has become much more widespread.”

“Many factors are driving SaaS adoption, including the benefits of rapid deployment and rapid ROI, less up front capital investment, and a decreased reliance on limited implementation resources,” commented Ms. Mertz. “Greater market competition and increased focus by the ‘megavendors’ is reinforcing the legitimacy of on-demand solutions. Many enterprises are further encouraged by the fact that with SaaS, responsibility for continuous operation, backups, updates and infrastructure maintenance shifts risk and resource requirements from internal IT to vendors or service providers.” " SaaS adoption continues to rise within the enterprise application markets as tighter capital budgets in the current economic environment demand leaner alternatives, popularity increases, and interest for platform as a service and cloud computing grow,” Ms. Mertz went on to say.

SaaS growth varies by industry and software type. Market growth remains the highest among areas fulfilled by horizontal business software systems which often leverage common processes and best practices and are distributed among virtual locations and integrated with social media projects.

Digital content creation (DCC) and office productivity suites remain the fastest growing SaaS segments. DCC is projected to reach $126 million in 2009, up from $70 million from the year prior and office productivity suites are expected to each $512 million in 2009, up from $136 million in the year prior. The content, communications and collaboration (CCC) market continues to show the greatest volume of SaaS revenue across market segments, generating $2.5 billion in 2009, up from $2.16 billion in 2008.

	2009	2008
Content, Communications & Collaboration (CCC)	2,507	2,155
Office Suites	512	136
Digital Content Creation (DCC)	126	70
Customer Relationship Management (CRM)	2,169	1,838
Enterprise Resource Planning (ERP)	1,376	1,256
Supply Chain Management (SCM)	861	748
Other Software Applications	483	387
Total Enterprise Software	8,035	6,591

SaaS adoption within the enterprise resource planning (ERP) and supply chain management (SCM) varies based upon business process complexity. SaaS is expected to represent about 1% of manufacturing and operations revenue, but more than 18% of human resources and human capital management (HCM) and 30% of the purchasing and procurement segment by 2013. The CRM software market exhibits continued broad based market adoption, ranging between 9% and 33% of total software market. Overall, SaaS represented more than 18% of the total CRM software market in 2008.

May 7, 2009 in SaaS | Permalink | Comments (0) | TrackBack (0)

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