A worldwide review of Software-as-a-Service (SaaS) growth

Two of the top challenges customers face when implementing SaaS services in Europe are customization and limited flexibility, according to a recent Gartner Press Release.

But, despite these challenges SaaS revenue jumped 23% in 2011 from 2010, to reach $2.7 billion. By 2015 this figure is expected to reach nearly $5 billion.

The biggest market penetration is taking place in the U.K., Ireland and Netherlands. The Nordic countries are not far behind. One of the reasons for this, is the fact that English is the dominant language. This allows North American vendors to spread their wings in Western Europe with less localization efforts. Further, a solid Internet Infrastructure underpins this high adoption rate.

Worldwide, SaaS revenue edged over the $12 billion mark representing an increase of $2 billion from 2010 levels. North America continues to dominate Cloud IT spend, accounting for nearly 64% of all SaaS revenue in 2011. This will dip slightly to 60% in 2015.

“In North America, ease and speed of deployment are primary reasons for SaaS adoption, followed by lower TCO,” said Gartner.

“Limited capital expense is also considered more important in North America than in the other regions. Consistent with the other regions, CRM shows the highest use of SaaS among enterprise applications while use of Web conferencing, e-learning and travel booking is higher in North America than in the other regions.”

Meanwhile, Asian Tigers like Japan are also eating up SaaS services. By 2015, SaaS revenue is expected to reach nearly $700 million.

Sales force automation and solutions for B2B call centers are expected to be key drivers in the Japanese SaaS sectors.

According to Gartner, SaaS revenue in Asia/Pacific is forecast to total $768.3 million in 2011, a 27.7 percent increase from 2010 revenue of $601.8 million. By the end of 2015, SaaS revenue in Asia/Pacific will reach $1.7 billion.

Established infrastructure, stable networks and a high availability of vendor sales, marketing and support services structures provide fertile ground for SaaS adoption.

“SaaS is no longer considered a fad and it is making traction despite some of the concern over security issues and the difficulty of managing change in a shared environment,” said Gartner.

“Because of faster implementations that fit lower operational costs, SaaS and BPM seem to be gaining traction together. This is one kind of agility besides business rules that seem to have momentum these days.”

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