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CRM Biggest Market for Software as a Service (SaaS)

By Vangie Beal     Feedback

Gartner expects SaaS to represent nearly 32 percent of the CRM market's total software revenue in 2011.

In a new report, Gartner says worldwide software as a service (SaaS) revenue is expected to grow 21 percent in 2011, reaching $12.1 billion. SaaS-based application delivery is expected to experience healthy growth through 2015, when worldwide revenue is projected to reach $21.3 billion.

On-demand CRM continues to grow

After more than a decade of use, adoption of SaaS continues to grow and evolve within the enterprise applications market, said Gartner.

Within the SaaS market, customer relationship management (CRM) continues to be the largest market. SaaS revenue within the CRM market is forecast to reach $3.8 billion in 2011, up from $3.2 billion in 2010.

"The market landscape for on-demand CRM continues to evolve and mature as the availability and use of SaaS solutions become more pervasive," said Tom Eid, research vice president at Gartner. "Greater market competition and increased focus on mega-vendors reinforce the legitimacy of on-demand solutions, mitigating initial objections about security and availability for many, as acceptance of SaaS as a viable model for enterprise computing services grows."

Content management and collaboration

Other findings in the report relate to the content, communications and collaboration market, which is on track to surpass $3.3 billion in 2011, up from $2.8 billion in 2010, said Gartner.

The content, communications and collaboration market continues to show the widest disparity of SaaS revenue generation, with SaaS representing just 5 percent of enterprise content management (ECM) in 2010, but approximately 83 percent of Web conferencing, said Gartner.

SaaS ERP only 7 percent of market

ERP SaaS offerings contributed approximately $1.5 billion to the SaaS market in 2010, and by year-end 2011, Gartner expects this to increase to $1.7 billion.

The proportion of enterprise resource planning (ERP) revenue attributed to SaaS overall is still in the single digits, at approximately 7 percent of the overall ERP market.

The penetration of SaaS within ERP varies greatly between sub-segments, with human capital management (HCM) being the most penetrated (in terms of adoption and revenue growth) and enterprise asset management (EAM) and manufacturing being relatively unaffected by SaaS, said Gartner.

This article was originally published on July 11, 2011
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