Gartner Says Worldwide SaaS Revenue To Grow 21% This Year

Gartner, the leading research firm, said SaaS will grow by 21% this year with CRM leading the way. Based on the trends we have been observing in the recent years, this is pretty much expected. After the initial FUD and maturation of cloud based technologies, enterprises are looking beyond the security and privacy issue to realize the business value associated with SaaS and other cloud based services. This trend is only going to accelerate in the coming years.

Some of the predictions from the study are:

SaaS revenue is forecast to reach $12.1 billion in 2011, a 20.7 percent increase from 2010 revenue of $10 billion
Worldwide SaaS revenue is projected to reach $21.3 billion
Gartner estimates that 75 percent of current SaaS delivery, as measured by revenue, could be regarded as cloud services, and this could exceed 90 percent by 2015 as the SaaS model matures and converges with cloud service models
SaaS revenue within the CRM market is forecast to reach $3.8 billion in 2011, up from $3.2 billion in 2010. Gartner expects SaaS to represent nearly 32 percent of the CRM market’s total software revenue in 2011
SaaS revenue within the content, communications and collaboration (CCC) market is on pace to surpass $3.3 billion in 2011, up from $2.8 billion in 2010
Enterprise resource planning (ERP) revenue attributed to SaaS overall is still in the single digits, at approximately 7 percent of the overall ERP market. ERP SaaS offerings contributed approximately $1.5 billion to the SaaS market in 2010, and by year-end 2011, Gartner expects this to increase to $1.7 billion. The penetration of SaaS within ERP varies greatly between subsegments, with human capital management (HCM) being the most penetrated (in terms of adoptions and revenue growth) and enterprise asset management (EAM) and manufacturing being relatively unaffected by SaaS

These forecasts shouldn’t surprise those following the SaaS space closely. In fact, yesterday’s announcement by Box (previous CloudAve coverage) that Procter and Gamble is using Box’s cloud content management solution to 18000 of their global employees is an indication of this trend. If large organizations like P&G are comfortable with SaaS and other cloud services, I would say that we have seen the dawn of enterprise cloud computing and the adoption is going to increase multifold in the coming years. The forecast is cloudy but people feel the excitement of summer in the cloudy land.