Worldwide software as a service revenue is forecast to reach $7.5 billion in 2009, a 17.7 percent increase from 2008 revenue of $6.4 billion, according to technology market research firm Gartner, Inc. The company predicted the market would show consistent growth through 2013 when worldwide SaaS revenue will total over $14 billion for the enterprise application markets.

The content, communications and collaboration (CCC) market and the customer relationship management (CRM) market continue to have the largest amount of SaaS revenue across market segments, according to Gartner’s research, with the CCC market generating $2.6 billion in 2009, up from $2.14 billion in 2008 and the CRM segment generating $2.3 billion in 2009, up from $1.9 billion in 2008.

"The adoption of SaaS continues to grow and evolve within the enterprise application markets,” said Sharon Mertz, research director at Gartner. “The composition of the worldwide SaaS landscape is evolving as vendors continue to extend regionally, increase penetration within existing accounts and ‘greenfield’ opportunities, and offer more-vertical-specific solutions as part of their service portfolio or through partners.”

In addition, Gartner found 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. Although Mertz acknowledged 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.

SaaS has continued to represent a key driver of growth in the CRM market for the past four years, climbing from less than $500 million in 2005 and over 8 percent of the CRM market to over 20 percent of the market in 2008, with nearly $1.9 billion in revenue. Gartner expects growth to continue, with SaaS representing almost 24 percent of the CRM market’s total software revenue in 2009.

“The market landscape for on-demand CRM continues to evolve as the availability and usage of SaaS solutions becomes more pervasive,” Mertz said. “The rapid adoption of SaaS and the marketplace success of Salesforce.com have compelled vendors without an on-demand solution to either acquire smaller niche SaaS providers or develop the solution internally in response to increasing buyer demand.”