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March 27, 2012

Software as a Service to reach $14.5b in revenue in 2012

Software as a Service will will grow to $14.5b worldwide in 2012 according to a new report.

By Vinod

Worldwide revenues for software-as-a-service (SaaS) is up 17.9% from 2011, which was $12.3 billion according to research firm Gartner.

Gartner is predicting that this trend will continue, with SaaS-based delivery reaching $22.1b in 2015.

Sharon Metrz, research director at Gartner believes it is a sign of evolving maturity over the last decade with enterprise application markets.

"Increasing familiarity with the SaaS model, continued oversight on IT budgets, the growth of platform as a service (PaaS) developer communities and interest in cloud computing are now driving adoption forward."

In Western Europe, SaaS is predicted to surpass $3.2b in 2012, up from $2.7b in 2011, while SaaS revenue is Eastern Europe is projected to reach $169.4m, up from $135.5m.

North America is the most mature regional market, with SaaS forecast to total $9.1 billion in 2012, up from $7.8 billion in 2011. As in Europe, North America shows the highest SaaS deployments in expense management, financials, email and office suites. However, use of Web conferencing is higher here than in all other regions, due to more widely spread workforce.

SaaS revenue in Asia/Pacific is on pace to reach $934.1 million in 2012, up from $730.9 million in 2011. SaaS revenue in Latin America is forecast to total $419.7 million in 2012, up from $331.1 million last year.

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Nathan Marke, CTO at IT Services company 2e2 believes this shows how the market has grown and will continue to do so, even at a time when budgets are tight for most business.

"The ability to access new applications and services while at the same time reducing capital expenditure is an extremely attractive proposition. For example, being able to pay for services such as ERP on a pay-for-use or subscription basis can provide business with the flexibility they require. The challenge for organisations going forward is to ensure their network infrastructure continues to evolve to meet these growing SaaS demands. They must also be able to manage these services effectively alongside the on-premise services they use," he said.

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