Software as a service revenue to grow 21 percent in 2011

Worldwide software as a service (SaaS) revenue is
expected to reach $12.1 billion in 2011, a 20.7 percent increase from 2010
revenue of $10 billion, according to Gartner.

The SaaS-based delivery will experience healthy growth
through 2015, when worldwide revenue is projected to reach $21.3 billion.

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

“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.
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,” Eid

During the past two years, the significant industry buzz
surrounding SaaS and other off-premises models has shifted to cloud computing.
Cloud computing is a broad concept, of which SaaS is only one variation,
representing the application layer of the overall cloud architectural stack.

However, SaaS has been a lead indicator of the cloud
concept for some time. Gartner estimates that 75 percent of current SaaS
delivery, as measured by revenue, could be regarded as cloud services, and this
could exceed 90 percent by 2015 as the SaaS model matures and converges with
cloud service models.


Customer relationship management (CRM) continues to be
the largest market for SaaS. SaaS revenue within the CRM market is forecast to
reach $3.8 billion in 2011, up from $3.2 billion in 2010. Gartner expects SaaS
to represent nearly 32 percent of the CRM market’s total software revenue in

SaaS revenue within the content, communications and
collaboration (CCC) market is on pace to surpass $3.3 billion in 2011, up from
$2.8 billion in 2010. The CCC market continues to show the widest disparity of
SaaS revenue generation, with SaaS representing just 5 percent of enterprise
content management (ECM) in 2010 but approximately 83 percent of Web

The proportion of enterprise resource planning (ERP)
revenue attributed to SaaS overall is still in the single digits, at
approximately 7 percent of the overall ERP market. ERP SaaS offerings contributed
approximately $1.5 billion to the SaaS market in 2010, and by year-end 2011,
Gartner expects this to increase to $1.7 billion.

The penetration of SaaS within ERP varies greatly between
subsegments, with human capital management (HCM) being the most penetrated (in
terms of adoptions and revenue growth) and enterprise asset management (EAM)
and manufacturing being relatively unaffected by SaaS.

By Team

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