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SaaS set to take larger chunk of enterprise software market

Simon Quicke

Hosted software is continuing to grow in the enterprise market as concerns around security and service levels have been overcome.

According to a SaaS market forecast from Gartner the worldwide revenues from enterprise spending will top $8.5bn this year and by 2014 it will be worth 16% of the market, up from the 10% it managed last year.

Adoption rates across vertical sectors in the enterprise market differ in the speed of deployment but the overall trend is pointing in one direction.

"After a decade of use, adoption of SaaS continues to grow and evolve within the enterprise application markets. As tighter capital budgets demand leaner alternatives, familiarity with the model increases, and interest in platform as a service and cloud computing grows," said Sharon Mertz, research director at Gartner.

She added that the most common use of SaaS was "characterised by horizontal applications with common processes, among distribvuted virtual workforce teams and within web 2.0 iniatives".

"The popularity of SaaS has incrteased significantly within the past five years and initkial 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," she said.

Rob Lovell, CEO of cloud computing provider ThinkGrid said that the Gartner predictions mirrored what was happening at the coalface.

"Customers are coming to us and our partners because they are simply fed up with the cost and pain of managing certain aspects of their IT infrastructure and application estate. They want more choice and flexibility around IT and SaaS-based cloud services deliver on this," 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. SaaS-based cloud services allow them to eliminate these risks and upfront investment; they can try an application and if it demonstrates business benefits then great; if not, they can simply turn the service off," he added.

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