IDC, one of the leading industry analyst firms, just unveiled their new report “Worldwide Software as a Service 2010-2014 Forecast: Software Will Never Be the Same”
The report says that IDC research shows SaaS growing six times faster than on-premises software, forecasting compound growth of 26% per year through 2014.
This IDC study presents IDC’s first look at worldwide SaaS software performance in 2009 and anticipated performance through 2014. SaaS is the service enablement of products from all three primary software markets: applications, application development and deployment, and system infrastructure software, and as such, SaaS represented just over 73% of IT public cloud services revenue in 2009. The SaaS market reached $13.1 billion in revenue in 2009, and IDC expects it will grow to $40.5 billion by 2014 at a CAGR (compound annual growth rate) of 25.3%.
“Figuring out how to find and capitalize on the enormous cloud services transition is the number 1 strategic goal of most IT product vendors,” according to Robert Mahowald, research vice president of IDC’s SaaS and Cloud Services practice. “Cloud represents both a tremendous challenge and potentially an opportunity to align with partners, create new capabilities, move into new markets, and define new leaders.”
SaaS is growing, on-premise is shrinking
Other key data points from the new IDC report:
- In 2009, the on-premises software market shrunk by $7 billion while SaaS grew to $13.1 billion.
- IDC expects SaaS to grow to $45 billion by 2014, a CAGR of 25.3%.
- Fewer than 20 percent of new software products and under 60 percent of refreshes will be destined for company data centers.
As more customers learn about the very high satisfaction and ROI businesses are achieving through migrating to SaaS and cloud computing, the growth rate for SaaS will rocket even higher.