Gartner seeing huge adoption of software-as-a-service

Market hits $7.5 billion in revenue in 2009

Customer interest in cloud-based software applications is soaring, with software-as-a-service revenues set to reach $7.5 billion in 2009 – an increase of nearly 18% over last year, according to new research from Gartner.

I don’t find the numbers too surprising – but the success of software-as-a-service is in stark contrast to many other portions of the recession-plagued IT industry.

Worldwide, software-as-a-service revenue will continue growing, totaling over $14 billion in enterprise application markets by 2013, according to Gartner.

“Adoption of the on-demand deployment model has continued to grow as on-demand vendors have extended their services through alliances, partner offerings, and more recently, by offering and promoting user application development through platform as a service (PaaS) capabilities,” Gartner analyst Sharon Mertz says in a press release. “Although usage and adoption is still evolving, deployment of SaaS still varies between the enterprise application markets and within specific market segments because of buyer demand and applicability of the solution.”

The biggest chunk of SaaS revenue is going to content, communications and collaborations applications, which are set to pull in $2.6 billion in revenue in 2009. Customer relationship management tools came in second with $2.3 billion.

Interest in software-as-a-service is coming at the expense of hardware vendors. IDC recently reported an 18% drop in worldwide revenue for external disk storage systems. And if customers continue to adopt software-as-a-service en masse, they will have even less need to buy expensive storage and server systems.

Add it all up, and it looks like the IT market is turning into a SaaS world.

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Copyright © 2009 IDG Communications, Inc.