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SaaS spending going way up

Worldwide SaaS spending is forecast to reach $14.5 billion by next year

Worldwide software-as-a-service (SaaS) spending is forecast to reach $14.5 billion in 2012, a 17.9 percent increase from 2011, according to Gartner.

The analyst house added that SaaS sales will experience healthy growth through to 2015, when worldwide revenue is projected to reach $22.1 billion.

“After more than a decade of use, adoption of SaaS continues to grow and evolve regionally within the enterprise application markets,” said Gartner analyst Sharon Mertz. “Increasing familiarity with the SaaS model, continued oversight on IT budgets, the growth of platform-as-a-service (PaaS) developer communities and interest in cloud computing are now driving SaaS adoption forward,” she said.

The top obstacles encountered when deploying SaaS vary by region, Mertz said. Limited flexibility of customisation and limited integration to existing systems are the primary issues in North America. And in the EMEA region, network instability is the issue most frequently encountered, said Mertz.

Gartner said vendors are more aggressively pursuing SaaS buyers outside traditional markets by offering local-language availability, forming alliances and constructing data centres to accommodate local requirements.

In Western Europe, SaaS revenue is forecast to surpass $3.2 billion in 2012, up from $2.7 billion in 2011, while SaaS revenue is Eastern Europe is projected to reach $169.4 million, up from $135.5 million last year.

Nathan Marke, chief technical officer at IT services provider 2e2, said: “At a time when many organisations still have tight IT budgets the ability to access new applications and services while at the same time reducing capital expenditure is an extremely attractive proposition.”

The SaaS challenge for organisations going forward, said Marke, is “to ensure their network infrastructure continues to evolve” and “manage SaaS services effectively alongside the on-premise services they use”.