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
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.
"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
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.