Gartner: Enterprise SaaS $9.2 billion and growing

Analyst firm Gartner today released a forecast of revenue associated with software as a service (SaaS) within the enterprise application software market and it shows that cloud and hosted services are growing at a rapid pace in the enterprise.

For the sake of clarity, Gartner estimates that 75 percent of the current SaaS delivery revenue could be considered a cloud service, and that figure could exceed 90 percent by 2014 as the SaaS model matures and converges with cloud services models.

Gartner forecasts that SaaS revenue will reach $9.2 billion in 2010, up 15.7 percent from 2009 revenue of $7.9 billion. The market is projected for stronger growth in 2011 with worldwide SaaS revenue totaling $10.7 billion, a 16.2 percent increase from 2010 revenue.

There are a number of interesting aspects that Gartner noted in a recent blog post:

• An increasing number of enterprises are using a variety of SaaS applications from multiple vendors that were procured and deployed without participation from IT, creating management issues and challenges.
• SaaS deployments are becoming larger, with deals more frequently appearing in the range of thousands to tens of thousands of users within large enterprises.
• Social media and social software are becoming increasingly integrated with SaaS solutions, as social platforms such as Facebook and Twitter are leveraging customer service, sales and marketing initiatives. In contrast, recent research indicates that social software has the lowest adoption rate by buyers of SaaS solutions.
• Content, communications, and collaboration (CCC) continues to lead the enterprise SaaS market with worldwide CCC revenue on pace to reach $2.9 billion in 2010, followed by customer relationship management revenue of $2.6 billion.

As SaaS and cloud services continue to proliferate, there is a clear risk that enterprises could be lulled into a false understanding of what they are actually buying. And as Gartner notes, hosting and application management are not synonymous with SaaS, nor do they necessarily comply with the definition of cloud computing.

Whether or not applications are truly "cloud" probably doesn't matter at the moment, but the time will come when enterprise use cases will require more specificity around how and where applications and systems are deployed and managed.