Online Software Sales Forecast Defies Recession

By Jessica Davis  |  Print this article Print


Desktop-as-a-Service Designed for Any Cloud ? Nutanix Frame

Even as hardware sales decline, Gartner predicts that online software-as-a-service sales will rise by more than 20 percent in 2009. Here's which software applications are showing the greatest strength in the area of on-demand SAAS delivery.

Even as hardware sales are in decline in 2009, software as a service is forecast to grow 21.9 percent over last year to $9.6 billion.

That's according to research company Gartner, which says the SAAS market will show consistent growth through 2013, when the revenue will total $16 billion for enterprise applications.

"The adoption of SAAS continues to grow and evolve within the enterprise application markets as tighter capital budgets in the current economic environment demand leaner alternatives, popularity increases, and interest [in] platform as a service and cloud computing grows," says Sharon Mertz, research director at Gartner, in a statement.

Trend Micro asserts its commitment to SAAS. Click here to read more.

"Adoption of the on-demand deployment model has grown for nearly a decade, but its popularity has increased significantly within the last five years," Mertz adds. "Initial concerns about security response time and service availability have diminished for many organizations."

Gartner points out that SAAS adoption and growth are most significant in areas characterized by horizontal applications with common processes, used by distributed virtual work force teams and within Web 2.0 initiatives.

According to Gartner, office suites and digital content creation are the fastest-growing markets for SAAS. Office suites are projected to total $512 million in 2009, up from $136 million in 2008. Digital content creation revenues are forecast to total $126 million in 2009, up from $70 million in 2008.

Gartner says the adoption of SAAS ERP and supply chain management (SCM) varies based on process complexity. Gartner adds that SAAS is expected to represent only about 1 percent of ERP manufacturing and operations revenue, but more than 18 percent of human capital management (HCM) and 30 percent of the procurement segment by 2013.

Overall, SAAS accounted for more than 18 percent of the CRM market total revenue in 2008, according to Gartner.

Gartner says factors that impede adoption of SAAS include concerns about data security, a perceived lack of competitive differentiation, increasing concerns about scalability and questions about vendor longevity.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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