SaaS is slowly gaining adoption not just in the small and mid market range but also in big enterprises. According to a new Gartner report “Software as a Service 2009-2014″, the SaaS revenues within the enterprise software market will grow in 2010 by 14.1 percent from the 2009 revenues. In 2009, the revenues were $7.5 billion and it is growing to $8.5 billion this year.
Worldwide software as a service (SaaS) revenue within the enterprise application software market is forecast to surpass $8.5 billion in 2010, up 14.1 percent from 2009 revenue of $7.5 billion, according to Gartner, Inc. The rapid adoption of SaaS has contributed to growth in varying degrees across the enterprise software markets. There will be a shift in total SaaS revenue from just over 10 percent of the combined markets in 2009, to more than 16 percent of these combined markets in 2014.
According to Sharon Mertz, Research Director at Gartner, the reason for this rapid growth is the leaner economic period. The difficult economic times sort of forced the businesses to adopt SaaS as a cost cutting option and they eventually got used to the SaaS way of doing things, leading to more SaaS and cloud computing adoption. I would like to add that increasing maturity of the SaaS applications combined with meeting some of the integration challenges has also played a role in the adoption.
Sharon Mertz also pointed out
Adoption varies between and within markets, and although use is expanding to a wider range of applications and solutions, the most widespread use is still characterized by horizontal applications with common processes, among distributed virtual workforce teams and within Web 2.0 initiatives.
As the adoption grows, we are going to see more and more vendors moving to offering SaaS version of their products resulting in increased competition and more options to the customers. However, key challenges remain and we need to address them fast before we see a more ubiquitous adoption. Some of the challenges include
- Increased security and transparency in the process
- Better SLAs
- Open APIs to facilitate data portability
- Supporting open formats
- Ensuring that the software bloat from the traditional software era doesn’t translate into browser bloat in the SaaS era. To do this, vendors need to adopt open technologies like HTML5 and, also, work with browser vendors to make browsers leaner. One way they can do this is by participating in the development process of some of the open source browsers.
The bottom line is that SaaS is growing big and it is just a matter of time before bloated desktop applications become part of the history.