Worldwide software as a service (SaaS) revenue within the enterprise application software (EAS) market is forecast to reach $9.2bn in 2010, up 15.7% from 2009 revenue of $7.9bn, according to information technology research and advisory firm Gartner.
The IT researcher said that the rapid adoption of SaaS will contribute towards stronger growth in 2011 with worldwide SaaS revenue totaling $10.7bn, an increase of 16.2% compared to 2010 revenue.
Gartner observes that an increasing number of enterprises are using a variety of SaaS applications from multiple vendors that were procured and deployed without participation from IT, creating management issues and challenges.
The firm said that content, communications, and collaboration (CCC) SaaS market continues to lead the enterprise SaaS market with worldwide CCC revenue reaching $2.9bn in 2010, followed by customer relationship management (CRM) revenue of $2.6bn.
In addition, for CCC technologies, SaaS use varies across the market segments, such as ECM and search, SaaS is barely used at all, while for Web conferencing, it is the predominant form of software access.
According to the advisory firm, interest has been growing for e-commerce SaaS solutions in business-to-consumer environments, although some buyers express concerns about a potential lack of differentiation, impact on the total IT portfolio, integration challenges with on-premises applications, and uncertainty over data ownership (client data versus aggregated data).
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Gartner estimates that 75% of the current SaaS delivery revenue could be considered as a cloud service, and that could exceed 90% by 2014 as the SaaS model matures and converges with cloud services models.
Gartner research director Sharon Mertz said because SaaS and cloud were hot concepts in the market, many suppliers were rebranding their hosting or application management or application outsourcing capabilities as SaaS or were claiming their offerings are available ‘in the cloud.’
"Enterprises run the risk of getting nasty shocks when the thing they thought they were buying turns out to be something altogether different; and hosting and application management are not synonymous with SaaS, nor do they necessarily comply with the definition of cloud computing," Mertz said.
