Gartner has predicted that worldwide revenue from software as a service (SaaS), which the analyst firm defines as software that is owned, delivered and managed remotely by one or more providers, will reach $12.1bn in 2011, up 20.7% from last year.
By 2015 the market will be worth $21.3bn, a 16.3% compound annual growth rate (CAGR), compared with a total application market CAGR of 8.5%.
“Initial concerns about security, response time and service availability have diminished for many organisations as SaaS business and computing models have matured and adoption has become more widespread,” said Tom Eid, research vice president at Gartner.
The analyst firm says that over the last two years, the interest in SaaS and other off-premises models has shifted to cloud computing. Gartner estimates that at the moment three quarters of the revenue from SaaS delivery could be regarded as cloud services, and this could exceed 90% by 2015.
Customer relationship management (CRM) is the largest SaaS market, forecast to reach $3.8bn revenue in 2011, up from $3.2bn last year. Gartner expects SaaS to represent nearly a third of the CRM software market revenue in 2011. On the other hand, only around 7% of enterprise resource planning (ERP) revenue is delivered as SaaS, worth just $1.5bn in 2010, rising to $1.7bn by the end of 2011. The highest proportion is in Human Capital Management (HCM).