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SaaS: Gartner Lowers Forecast for SaaS Growth
Gartner adjusted lower its estimates of the SaaS market size and also lowered predictions for worldwide SaaS growth from those made in March 2007. In March, Gartner said the worldwide SaaS market was $6.3 billion. The new report readjusts the SaaS market size estimate downward and sees the total market size in 2007 as $5.1 billion.
In March, Gartner had predicted an annual growth rate of 25 percent to continue through the end of 2011 when it was to have reached $19.3 billion. The new estimate calls for an average annual growth rate of 22.1 percent with the estimate for 2007 to come in at around 21 percent, utlimately becoming an $11.5 billion market by 2011.
Granted, those are big numbers, and the growth rate is pretty torrid, but their market size estimate shrunk more than 20 percent over five months!
SaaS adoption varies widely by application. In some cases, less than 1 percent of the market for an application type is hosted, while for other classes of applications, SaaS has more than 75 percent of the market share.
For example, in Enterprise Content Management (ECM) and Enterprise Search markets, SaaS has about a 1 percent market share. But in the eLearning and web conferencing areas, SaaS is in the 60 to 70 percent range of market share. Markets that are now beginning to see SaaS offerings include compliance, risk management, office administration, sales and service automation, procurement optimization, and small integrated business systems.
The Gartner report also sees SaaS as becoming very attractive to small and medium sized businesses.
