Enterprise SaaS revenues top $9 billion

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Software as a Service (SaaS) is increasingly becoming the model of choice for enterprises when it comes to application delivery.

A new report from Gartner claimed revenues within the sector would hit $9.2 billion (£5.8 billion) by the end of the year – a rise of 15.7 per cent from 2009’s $7.9 billion figure.

This year would not be a one off though, with the report forecasting an even larger 16.2 per cent rise in 2011 to revenues of $10.7 billion.

"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 Sharon Mertz, a research director at Gartner.

"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."

Content, communications and collaboration applications – such as web conferencing – were the main areas where businesses had move to SaaS, with revenues for these sectors reaching $2.9 billion. However, it was closely followed by the growing trend of SaaS customer relationship management (CRM), where revenues reached $2.6 billion.

SaaS is one element of the buzz word of the year, cloud computing, but Mertz claimed too many vendors were exploiting the growing excitement around the new technology, rather than admitting what their solutions really were.

"Because SaaS and cloud are hot concepts in the market, many suppliers are re-branding their hosting or application management or application outsourcing capabilities as SaaS or are claiming their solutions are available 'in the cloud,'” she said. “Much re-labelling of more traditional application outsourcing approaches is occurring."

"Suppliers run the risk of confusing and antagonising buyers if they persist in this approach. Organisations run the risk of getting nasty shocks when the thing they thought they were buying turns out to be something altogether different.”

“Hosting and application management are not synonymous with SaaS, nor do they necessarily comply with the definition of cloud computing," Mertz said.

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