Worldwide Software-as-a-Service revenue to reach $14.5 billion in 2012

by CXOtoday Staff    Mar 27, 2012

SaaS-based delivery will experience healthy growth through 2015, when worldwide revenue is projected to reach $22.1 billion, says Gartner.

Worldwide Software-as-a-Service (SaaS) revenue is forecast to reach $14.5 billion in 2012, a 17.9 percent increase from 2011 revenue of $12.3 billion, according to Gartner.

The firm said that SaaS-based delivery will experience healthy growth through 2015, when worldwide revenue is projected to reach $22.1 billion.

“After more than a decade of use, adoption of SaaS continues to grow and evolve regionally within the enterprise application markets,” said Sharon Mertz, Research Director at Gartner. “Increasing familiarity with the SaaS model, continued oversight on IT budgets, the growth of Platform-as-a-Service (PaaS) developer communities and interest in cloud computing are now driving adoption forward.”

Although growing interest has been observed in vertical-specific software, Gartner found that the most widespread use is still characterized by horizontal applications with common processes, among distributed virtual workforces and within Web 2.0 activities.

“The top issues encountered when deploying SaaS vary by region,” Mertz said.

The study found that limited flexibility of customization and limited integration to existing systems are the primary reasons in North America. In EMEA, network instability is the issue most frequently encountered, whereas longer-than-expected deployments are the top issue in Asia-Pacific.

“Vendors are more aggressively pursuing SaaS buyers outside traditional markets by offering local-language availability, forming alliances and constructing data centers to accommodate local requirements,” Mertz said.

The study revealed that SaaS revenue in Asia/Pacific is on pace to reach $934.1 million in 2012, up from $730.9 million in 2011. Overall, SaaS adoption in Asia/Pacific has been fragmented.

Asia-Pacific (excluding Japan) is a combination of mature markets, such as Australia, New Zealand, Hong Kong, Singapore, South Korea and Taiwan, and emerging markets, including China, India, Malaysia, Thailand, Indonesia, Vietnam and the Philippines. SaaS financial (accounting) applications are most popular, particularly in China and India. The next-highest SaaS usage is for ERP functions, such as expense management and employee performance management, followed by office suites, email and the CRM sales function, as per the report.

Gartner report said that North America, specifically the U.S., currently represents the largest opportunity for SaaS, and it is the most mature of the regional markets. SaaS software revenue is forecast to total $9.1 billion in 2012, up from $7.8 billion in 2011.

Consistent with other regions, North America shows the highest SaaS deployments in expense management, financials, email and office suites. Use of Web conferencing is higher in North America than in other regions, in part because of a highly distributed workforce, as per the findings.