IT budgets may be tighening under recessionary pressure but Software as a Service spending is forecast to reach $7.5 bilion this year, a 17.7% increase from 2008, according to analyst firm Gartner.
The market will show consistent growth through to 2013 when worldwide SaaS revenue will total over $14 billion, according to the research firm's latest assessment. The CRM market sector continues to dominate the SaaS revenue landscape, but has been joined by the content, communications and collaboration (CCC) sector at the top of the spending tree. The CCC market will generate $2.6 billion in 2009, up from $2.14 billion in 2008, and the CRM segment will create $2.3 billion in sales in 2009, up from $1.9 billion in 2008.
ERP revenues will climb to $1.239 billion in 2009 compared to $1.176 billion last year, while Supply Chain Management offerings will rise form $710 million last year to $826 million this year. 'Other' application software will rise from $387 million to $472 million, Office Suites rise from $56 million to $68 million year on year while Digital Content Creation will hit $62 million from $44 million.
"The adoption of SaaS continues to grow and evolve within the enterprise application markets,” said Gartner analyst Sharon Mertz. “The composition of the worldwide SaaS landscape is evolving as vendors continue to extend regionally, increase penetration within existing accounts and "greenfield" opportunities, and offer more vertical-specific solutions as part of their portfolio," she said.
“Adoption of the on-demand deployment model has continued to grow as on-demand vendors have extended their services through alliances, partner offerings, and more recently, by offering and promoting user application development through Platform as a Service (PaaS) capabilities. Although usage and adoption is still evolving, deployment of SaaS still varies between the enterprise application markets and within specific market segments because of buyer demand and applicability of the solution.”
But it's the CRM market that continues to set a pace for the rest of the market with SaaS offerings now approaching a quarter of the entire market. SaaS CRM offerings have gone from 8% of the total CRM market in 2005 to over 20% in 2008 and are set to register a likely 24% this year.
“The market landscape for on-demand CRM continues to evolve as the availability and usage of SaaS solutions becomes more pervasive,” said Mertz. “The rapid adoption of SaaS and the marketplace success of Salesforce.com have compelled vendors without an on-demand solution to either acquire smaller niche SaaS providers or develop the solution internally in response to increasing buyer demand.”
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