Home SaaS Market Grows Spectacularly to the Detriment of the IT Kings

SaaS Market Grows Spectacularly to the Detriment of the IT Kings

Two reports issued today by Gartner and IDC show a SaaS market exhibiting double digit growth across the enterprise and in the overall market.

This a SaaS market dominated by vendors that sell services more than on-premise licenses. The growth is proof that the IT kings of the enterprise face the greatest potential disruption as traditional licensing models are replaced by subscription services.

Gartner is forecasting the enterprise application software market to surpass $8.5 billion in 2010. That is up 14.1% compared to 2009 when revenues hit $7.5 billion.

IDC is reporting that the SaaS market had worldwide revenues of $13.1 billion in 2009. The research firm estimates these revenues will reach $40.5 billion by 2014.


Enterprise SaaS services represent 10% of the overall enterprise software market. The SaaS market’s share will rise to 16% by 2014.

Gartner reported that the SaaS market had some attrition in 2009 but revenues were generally up. Continued growth will be fueled by the attention on cloud computing.

What we see are markets with a lot of activity and others that are still uncertain of SaaS and its uses in the cloud. Gartner points out that security is not as much of an issue as it used to be, and that’s reflected in the increasing use of collaboration technologies. But there are places in the enterprise where the cloud is a concern more for its data portability issues than anything else. In resource planning, for instance, companies have deeper concerns about using a SaaS provider.

Overall Market

ICD’s report reflects how quickly the market has moved from software delivered on a compact disc.

For instance, IDC estimates that by 2012, about 85% of new software to the market will be delivered as a service. Revenues from SaaS services will account for nearly 26% of net new growth in the software market in 2014. In 2010, IDC predicts a $7 billion drop in worldwide license revenues.

What this all means is that there will be a significant shift for traditional enterprise vendors. The last 20 years have seen the rise of the IT kings like Oracle, Microsoft and a host of others. They now face a challenge to their crowns.

And that is just in one year.

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