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September 15, 2011

North America to account for 60.8% global SaaS revenue by 2015: Gartner

SaaS adoption is occurring mostly in Northern Europe, which is composed of the UK, Ireland, the Netherlands and Nordic countries

By CBR Staff Writer

Global software as a service (SaaS) revenue is set to reach $12.1bn in 2011, a 20.7% increase from 2010 of $10bn, according to Gartner.

By the end of 2015, North America’s share, which accounted for 63.6% of worldwide SaaS revenue in 2011, will represent 60.8% of worldwide SaaS revenue.

Gartner research director Sharon Mertz said increasing familiarity with the model, continued oversight on IT budgets, and the growth of platform as a service (PaaS) developer communities and interest in cloud computing are now driving adoption forward.

"Total cost of ownership (TCO) is a primary driver in Europe, Middle East and Africa (EMEA), while ease and speed of deployment is the key reason for choosing SaaS in Asia/Pacific and North America," Mertz said.

Limited flexibility of customization is a top issue in EMEA, while limited integration to existing systems is the primary reason in North America and Asia/Pacific.

"In North America, ease and speed of deployment are primary reasons for SaaS adoption, followed by lower TCO.

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"Consistent with the other regions, CRM shows the highest use of SaaS among enterprise applications while use of Web conferencing, e-learning and travel booking is higher in North America than in the other regions."

In Western Europe, SaaS revenue is on pace to reach $2.7bn, up 23.3% from 2010 revenue of $2.2bn.

In Eastern Europe, SaaS revenue is expected to reach $131.4m in 2011, a 29.8% increase from 2010 revenue of $101.2m.
Eastern Europe SaaS revenue is forecast to total $270.1m in 2015.

"SaaS penetration and adoption is occurring mostly in Northern Europe, which is composed of the UK, Ireland, the Netherlands and Nordic countries.

"This is due to a culturally open outlook toward technology adoption, well-established and generally good Internet infrastructure within these countries, and English being the primary business language.

"This also makes it much easier for North American vendors to branch out into the region and for local vendors in one country to adapt and sell their applications in other Northern European countries with less localization effort.

SaaS revenue in Asia/Pacific is forecast to total $768.3m in 2011, a 27.7% increase from 2010 revenue of $601.8m.

By the end of 2015, SaaS revenue in Asia/Pacific will reach $1.7bn.

"SaaS adoption is more prominent in the more mature markets in Asia/Pacific, such as Australia, New Zealand, Hong Kong, Singapore and South Korea, because of their established infrastructure, such as more-stable networks, as well as the availability of vendor sales, marketing and support service structures.

"In many cases, the use of English as a common language in these countries, except in South Korea, makes them an attractive destination for foreign providers investing in the region.

In Japan, SaaS revenue is projected to reach $379m in 2011, up 20.2% from 2010 revenue of $315.3m.

By the end of 2015, SaaS revenue is expected to reach $629.1m.

"It is easy to adopt SaaS solutions for B2B call center services because the workflow of this business is standardized and transaction volume is constant in Japan," Mertz said.

SaaS revenue in Latin America is on pace to total $328.4m in 2011, a 23.5% increase from 2010 revenue of $266m.

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