Global software-as-a-service (SaaS) revenues within the enterprise application software market will exceed $8.5bn (£5.6bn) this year, predicts Gartner.
The analyst said it expects 2010 spending on SaaS to be higher than last year, when the revenues peaked at $7.5bn, as a result of the continuing industry buzz around cloud computing.
The economic benefits gained by adopting the technology will also be a major driving force behind SaaS revenue growth this year, added Gartner.
Sharon Mertz, research director at Gartner, said: “As tighter capital budgets demand leaner alternatives, familiarity with the model increases, and interest in platform-as-a-service and cloud computing grows.”
Gartner pinpointed several markets where the adoption of the technology was growing rapidly and maturing. These include the project and portfolio management (PPM), customer relationship management sectors (CRM) and the content, communications and collaboration market (CCC).
"The popularity of SaaS has increased significantly within the past five years,” added Mertz. “Initial concerns about security, response time and service availability have diminished for many organisations, as SaaS business and computing models have matured and adoption has become more widespread.”
Rob Lovell, chief executive of cloud computing specialist ThinkGrid, said Gartner's predictions fit in well with the SaaS adoption trends he has picked up on within the IT channel.
He said: "Companies are asking themselves why they should continue with the status quo, making up-front capital expenditure investments and carrying all the risks associated with large scale IT implementations.
"Gartner's predictions show that the cloud model has made its mark and is fundamentally changing the way we all access and pay for IT."
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