These SAAS suites will account for 9 percent of total software revenue by 2012, coexisting with classic on-premises products, such as Microsoft Office and IBM Lotus, Gartner said. That tells us that some shops will be paying for Google Apps Premier Edition and premium editions of other products.
SAAS productivity suites may be popular, but because they are mostly "freeware," they're not responsible for the bulk of SAAS sales. That distinction goes to the CCC (content, communications and collaboration) market, which Mertz told me Gartner defines as software for e-mail, e-learning, instant messaging, search, team collaboration, Web conferencing and enterprise content management.
IBM Sametime Unyte, Cisco WebEx Connect and products from smaller players such as CallWave, Yuuguu and Yugma account for some of the sales in this segment, which Gartner believes will exceed $2.1 billion in 2008 and $4.7 billion in 2012.
The second largest section of the overall SAAS enterprise application market is CRM. Mertz said companies like Salesforce.com, SugarCRM and NetSuite are carrying this market, with CRM SAAS sales exceeding $1.7 billion in total software revenue. Gartner expects CRM SAAS sales to reach $3.2 billion in total software revenue in 2012.
The prospects for SAAS sales seem rosy for 2008 and beyond if the Gartner report is to be believed, although Mertz said she expects the recession to have an impact on SAAS and all high-tech markets in 2009. How much of an impact remains to be seen.
Counting SAAS and on-premises solutions, Gartner expects the worldwide software market to grow at a compound annual growth rate of 10 percent through 2012. Asked for a worst-case scenario, Gartner downsized that figure to 9.4 percent, accounting for the current recession. Mertz explained:
"Whereas we thought 2008 may have been slower and the recovery would start at the end of 2009, we now think 2009 will be slower and we'll see the recovery in 2010, but it's so tough to tell because the markets are so jittery. We have yet to see what all of the long-term effects are going to be in the credit crisis."
Not too shabby, but don't rush to conclude that SAAS, by dint of its supposed cheaper cost, will pick up the ball dropped by on-premises contracts.
Mertz said despite the hype that SAAS will thrive in a downturn, it's likelier that SAAS will only be used where it makes good business sense. In other words, don't expect a gold rush for SAAS; instead expect, ahem, a cloud here or there.