Gartner: SaaS Enterprise App Spending Set to Soar

Spending on SaaS (software as a service) enterprise applications will top US$6.4 billion this year, a 27 percent jump over 2007, and will catapult to $14.8 billion by 2012, according to the research firm Gartner.

SaaS adoption is being driven by businesses' pursuit of cost savings and quicker implementations, as well as wider availability of high-speed Internet connections, Gartner said. Also, initial concerns regarding the SaaS applications' security and reliability have faded somewhat as the model has matured, Gartner added.

Content, communications and collaboration products constitute the biggest share of the SaaS market, with more than $2.1 billion in 2008 and $4.7 billion by 2012.

Those applications are followed by CRM (customer relationship management), which Gartner estimates will generate $1.7 billion this year and $3.2 billion by 2012.

Gartner's forecast only refers to business applications like CRM, not areas such as infrastructure software.

Meanwhile, IDC recently predicted that overall cloud computing services spending would grow from $16.2 billion this year to $42.3 billion by 2012, with business applications representing 52 percent of the latter figure, followed by infrastructure software with 18 percent and storage with 13 percent.