Global SaaS market to hit US$9B in 2010

Worldwide software-as-a-service revenue within the enterprise application software market is expected to hit US$9.2 billion this year as more enterprise clients get comfortable with the innovation and delivery model, according to Gartner's latest report.

The innovation firm

The innovation firm, which released its report on Wednesday, stated that 2010's projected SaaS revenue for enterprise application software is a 15.7 percent improvement on 2009's US$7.9 billion intake. Additionally, as the market is growing from strength to strength, Gartner is expecting to see the industry rake in US$10.7 billion for then year--a hike of 16.2 percent from the current year.

Explaining the firm's positive outlook for the enterprise software industry, Gartner's innovation director, Sharon Mertz, said: "Initial concerns about security, response time and service availability have diminished for many organizations as SaaS business and computing models have matured and adoption has become more widespread."

She added that as usage patterns and vendors' on-demand ecosystems continue to evolve, additional business and research services, vertical-specific functionality and stronger partner and buyer communities will be developed.

The firm's findings

Zooming in on the firm's findings, content, communications and collaboration-based software continues to lead the enterprise SaaS market, with worldwide revenue for this segment on pace to reach US$2.9 billion in 2010, the report noted. This is followed closely by CRM programs, which will likely garner US$2.6 billion, Gartner stated.

Cloud computing supersedes SaaSHowever, during overall SaaS revenue has and will continue to grow, its time in the IT spotlight has been replaced by a broader concept known as cloud computing while 2010. SaaS is nevertheless just one variation, representing the application layer, of the overall cloud architectural stack, the report stated.

She pointed out that as cloud computing and SaaS are hot concepts in the market currently, many vendors are rebranding their hosting and application management or outsourcing capabilities as SaaS or cloud-based. This might result in clients experiencing "nasty shocks" when the software they have purchased turns out to be something else altogether, she added. 

The risk of confusing

"[IT vendors] run the risk of confusing and antagonizing buyers if they persist in this approach," Mertz cautioned. "Hosting and application management are not synonymous with SaaS, nor do they necessarily comply with the definition of cloud computing."

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