SaaS revenue in enterprise software market to reach £5.8bn in 2010

Gartner predicts revenue will grow by 15.7 per cent from 2009

Software-as-a-service (SaaS) revenue within the enterprise application software market will reach $9.2bn (£5.8bn) in 2010, up 15.7 per cent from 2009, according to analyst Gartner.

"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, research director at Gartner.

Mertz added that the way SaaS is sold has evolved.

"There is increasing involvement from executives in purchasing decisions, as well as greater participation from IT in the purchase process due to larger deals, the expanding footprint of SaaS in the enterprise, and a higher requirement for downstream integration as SaaS becomes incorporated in the enterprise business process."

Content, communications and collaboration (CCC) is the SaaS segment which generates the most revenue, which Gartner says is on track to reach $2.9bn this year. This is followed by customer relationship management, which should reach $2.6bn in 2010.

Gartner argues that it is important to differentiate SaaS from hosting or application management or the outsourcing of applications.

"Many suppliers are rebranding their hosting or application management or application outsourcing capabilities as SaaS or are claiming their solutions are available 'in the cloud'," Mertz said.

"Enterprises 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."