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July 22, 2010

SaaS revenue within EAS market to surpass $8.5bn in 2010: Gartner

SaaS forecasted to account for 26% of CRM market total revenue in 2010

By CBR Staff Writer

Worldwide software as a service (SaaS) revenue within the enterprise application software market is forecast to surpass $8.5bn in 2010, up 14.1% from 2009 revenue of $7.5bn, according to information technology research and advisory firm Gartner.

The IT researcher said that the rapid adoption of SaaS has contributed to growth in varying degrees across the enterprise software markets and there will be a shift in total SaaS revenue from just over 10% of the combined markets in 2009, to more than 16% of these combined markets in 2014.

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.

The firm said that project and portfolio management (PPM) SaaS market continued to grow rapidly in percentage of sales; and SaaS alternatives may help to grow the overall PPM market again but some SaaS revenue growth will be at the expense of on-premises license.

According to the advisory firm, the content, communications and collaboration (CCC) market continued to show the widest disparity of SaaS revenue generation, with SaaS representing 4% of enterprise content management (ECM) and approximately 82% of Web conferencing in 2009.

SaaS accounted for nearly 24% of total customer relationship management (CRM) market revenue in 2009 and is exhibiting more-general market adoption in CRM space, ranging between 11% and nearly 40% of total software revenue, depending on the CRM subsegment. Gartner forecasts SaaS to account for 26% of CRM market total revenue in 2010.

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Sharon Mertz, research director at Gartner, said: "Usage and vendors’ on-demand ‘ecosystems’ continue to evolve to provide additional business and technology services, more-vertical-specific functionality, and stronger communities of partners and buyers.

"Although some attrition occurred in 2009 due to business workforce reduction, nearly all SaaS vendors grew revenue, even during the economic downturn, as buyers continued to confirm their acceptance of on-demand. We certainly expect adoption of SaaS to far outpace market growth through 2014."

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