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SaaS on a 'tear' says IDC

Projections show market set to grow at dizzying speed

By Maxwell Cooter, TechWorld
October 18, 2010 10:33 AM ET

TechWorld - Software as a Service is on "a tear" according to new research from IDC with revenue set to grow at six times faster than all software and SaaS is expected to show compound annual growth (CAGR) of around 26 percent up to 2014.

"Software will never be the same again" said IDC's Robert Mahowald, announcing the results during an IDC webinar. The survey also revealed that the perpetual licence market was suffered a fall of $7 billion in 2009. The report, Worldwide Software as a Service 2010-2014 Forecast: Software Will Never Be the Same, also revealed that ERP projects would be particularly badly hit with ERP upgrades being delayed or cancelled and with CAGR expected to be just five percent.

Software vendors will be looking at new routes to market: fewer than 20 percent of new software products and under 60 percent of refreshes will be destined for company data centres. The IDC survey found that most SaaS is being delivered to US companies - they currently have 71 percent of the market - but by 2014, it will become more global.

Despite this move towards SaaS, IDC found that 26 percent of companies were still resistant to the idea, saying that had no plans at all for a move to cloud computing. This rose to about 40 percent for companies with fewer than 100 employees.

There will, however, still be a role of ISVs in this new world, said IDC's Darren Bibby. "Software partners are very important," he said, pointing out that they able to react to this changing market much better than the large vendors. "ISVs are more nimble than the larger firms. They can watch what users are doing and anticipate problems

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