Cloud Expected to Keep Rising

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The cloud just got hotter. According to a forecast by Gartner, worldwide software as a service (SaaS) revenue will reach $12.1 billion by the end of the year—a 20.7 percent increase from 2010 revenue of $10 billion—and $21.3 billion by 2015.

“After more than a decade of use, adoption of SaaS continues to grow and evolve within the enterprise application markets,” explained Tom Eid, research vice president at Gartner, in a report.  “This is occurring as tighter capital budgets demand leaner alternatives, popularity and familiarity with the model increases, and interest in platform as a service and cloud computing grows.”

According to the report, “Forecast: Software as a Service, Worldwide, 2010–2015,” among SaaS deployments, customer relationship management applications continue to dominate. SaaS revenue within the CRM market is expected to reach $3.8 billion in 2011, an increase from $3.2 billion in 2010. Gartner expects SaaS to represent nearly 32 percent of the CRM market’s total software revenue this year.

While cloud computing is a “broad concept,” Gartner estimates that 75 percent of current SaaS delivery, as measured by revenue, could be regarded as cloud services, and that could exceed 90 percent by 2015, as the SaaS model matures and converges with cloud service models. Other forecasts include the following:

• Project and portfolio management will continue to experience strong growth through SaaS delivery, with a compound annual growth rate (CAGR) of 30 percent projected for the next five years.
• Office suites will post a 34.7 percent CAGR, and digital content creation (DCC) a 30.7 percent CAGR.
• Revenue growth associated with SaaS will double the total aggregated growth rates for both enterprise resource planning and supply chain management, but adoption of SaaS in those two areas varies based on process complexity.
• SaaS within ERP remains a “relatively small proportion of the overall market,” but Gartner still expects solid growth during the next five years.

Moreover, as cloud computing spreads, security concerns linger, though they have been reduced, says Joanne Correia, managing vice president
at Gartner.

“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,” Eid added in the report. “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.” 

Associate/Web Editor Brittany Farb can be reached at bfarb@destinationcrm.com.

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