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Gartner finds SaaS market to hit $19.3 billion by 2011.



The worldwide software-as-a-service (SaaS) market reached $6.3 billion in 2006 and is forecast to grow to $19.3 billion by year-end 2011, according to Gartner, Inc.

SaaS is hosted software based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers, at any time, on a pay-for-use basis, or as a subscription based on usage metrics. The SaaS model is popular for CRM and other technologies such as human resources.

Why such success? "The dysfunction of the client/server era is driving alternative approaches to IT development, delivery and management, which SaaS is the most apparent version of," said Ben Pring, research vice president for Gartner.

SaaS adoption is broadening out from CRM and HR into new areas such as procurement and compliance management, Gartner has found. However, the scale of change involved in moving to a SaaS approach is proving hard for many vendors to manage. "Due to the law of large numbers, traditional IT product models are becoming victims of their own success, while the relative smallness of new approaches facilitates growth much more easily," said Pring.

Although the SaaS market is still small, Gartner analysts said the scale of change that SaaS will produce requires providers to keep ahead of the SaaS wave. To do this, they recommend, among other options, to use products built on next-generation Web services, SOAs and highly automated server farms to produce "multitenant, mass-customizable products that facilitate agility while sustaining uniqueness at a reduced cost."

www.gartner.com

By David Sims, TMCnet Contributing Editor
COPYRIGHT 2007 Technology Marketing Corporation
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Copyright 2007, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Customer Inter@ction NEWS
Author:Sims, David
Publication:Customer Interaction Solutions
Date:Apr 1, 2007
Words:264
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