News

SaaS To Grow and Go Global, Analyst Says

• By Kurt Mackie
• March 9, 2007

The research firm predicts that the Worldwide SaaS market will grow to $19.3 billion by year-end 2011. Essentially, that's triple the market's value in 2006, which was $6.3 billion.

SaaS is a hosted software service in which customized applications are made available to clients on a usage or time basis. Gartner's analysts expect to see SaaS implementations built on next-generation Web services, SOAs (service-oriented architectures) and highly automated server farms.

SaaS won't just be used for customer relationship management and human resources-type applications. It will gravitate to providing procurement and compliance management solutions, according to Gartner.

The SaaS trend hasn't caught on quickly with larger IT service providers, according to Ben Pring, research VP at Gartner, and that has allowed smaller service providers to get into the market. He adds that "incumbent IT solution providers are slowly waking up" to this challenge.

SaaS is no longer considered a pipe dream by the larger IT players, according to Pring.

"There is now a widespread consensus among the movers and shakers of the IT industry that SaaS is an important and meaningful issue which can no longer be regarded as the 'lunatic fringe'," he stated.

Gartner recommends that service providers implement early changes in their plans to move toward SaaS "because of the scale of change required to successfully exploit SaaS opportunities."

And that scale is global. The SaaS business model will follow the trend of the manufacturing industries and move to lower cost production centers around the world, according to Pring.