On Demand ERP Software Research, Facts and Figures
Facts and figures related to the software as a service (SaaS), on-demand, hosted delivery and cloud computing CRM software market.
The SaaS industry reached $3.7 billion in 2006 and is forecast to grow at a cumulative rate of 32 percent per year through 2011, reaching revenues of approximately $15 billion, according to an estimate from technology research firm IDC.
Analyst firm Gartner predicted that by 2011, 25 percent of new business software will be delivered by SaaS.
Analyst firm Gartner Inc. also forecasts that the SaaS industry will achieve $5.1 billion in revenues in 2007, a 21 percent increase from 2006, and will climb to $11.5 billion in revenues in 2011. CRM SaaS is forecast to grow 26% annually through 2011. CRM SaaS growth varies for by segment (whether marketing, SFA and customer support) but hovers between about 7% and 18% of the total CRM software market. In 2006, SaaS CRM solutions grew from 8% in 2005 to about 12% of total CRM software market.
- A McKinsey survey among Service & Support Professionals Association members discovered that the proportion of CIOs considering SaaS software procurement jumped from 38 percent in 2006 to 61 percent in 2007.
A 2008 research report issued by McKinsey & Co and the Sandhill Group found that software-as-a-service (SaaS) and service-oriented architectures (SOA) are the two most important trends in the software industry. A survey among 850 enterprise companies revealed that 74% of respondents were “favorably disposed” towards adopting SaaS solutions, with companies currently spending 19% of their software budgets on subscription-based and on-demand solutions. The report commented that “For vendors, this is a strong indication that there is a clear opportunity even at the largest prospects for those that can offer the right product in combination with the right selling strategy.” The report also added that “nearly every company – or division of a larger enterprise – is a customer or a prospect for SaaS platforms”. In an interesting merging of the industry's top two disruptive platforms, the study also forecasted that while SaaS and SOA were currently on parallel development paths, “we expect them to converge in the future”, paving the way for a “tremendous battle between the largest software vendors and the newer SaaS providers”.
- The SaaS Customer Relationship Management market in Asia, excluding Japan, will grow at a compound annual growth rate of 61 percent between 2006 and 2010, according to a study by Springboard Research. Springboard pegged the SaaS CRM market in Asia at $69 million in 2006, and expects it to reach $460 million by 2010.
Australia, Singapore, Hong Kong, Korea, India and China are the key SaaS CRM markets in Asia Pacific, the report finds. Of these, Australia remains the top market, accounting for 35 percent of all SaaS CRM sales generated in the region. “SaaS CRM has gained acceptance in Asia’s business mainstream and the coming year will see higher adoption rates as larger enterprises opt for SaaS CRM,” said Balaka Baruah Aggarwal, Senior Manager for Emerging Software for Springboard Research. “At the same time, the market is set to witness unprecedented growth in the SME sector as a spate of new initiatives by vendors such as SAP, Microsoft, and Oracle increase their marketing activities.
Springboard currently estimates that SaaS CRM represents the largest segment of SaaS application expenditures in Asia at 45 percent, followed by collaboration, ERP/PLM/SCM applications, and human resource applications. “Springboard Research believes that a substantial portion of the growth in Asia Pacific’s SaaS CRM market will come from the SME segment. We expect SMEs in Asia Pacific to go for simpler CRM solutions that are not too complex,” said Aggarwal.
- A Network World magazine research article titled The Future of SAAS found several telling software-as-a-service market statistics, including:
- 75% of U.S. businesses will implement at least one SaaS business application by 2010
- Middle market and large enterprise companies will use an average of seven SAAS business applications by 2010 (which is more than double the current use)
- 30% of new business application software deployments will be SAAS by 2012
- Top 15 SaaS business applications
According to CIO Insight, the top 15 on-demand business applications systems are:
- Customer Relationship Management
- Human Resource Management
- Billing and Accounts Payable
- Collaboration Software
- Corporate Portals
- E-mail and Instant Messaging
- Business Process Management & Workflow Software
- Blogs, Wikis and Social Media or Web 2.0 Software
- Business Intelligence (BI), Analytics and Data Mining
- Database Systems
- Enterprise Resource Planning (ERP) Systems
- Content & Information Lifecycle Management
- Customer Self Service
- Supply Chain Management, Distribution and Logistics Software
A 2008 released report by the analysts at Tier 1 Research finds that while the traditional, on-premise CRM software market has reached relative maturity and is expected to incur a 6.2 percent annual growth rate through 2010, the on-demand CRM software market is expected to grow at a 41.0 percent compound annual growth rate through 2010.
The research reports indicates that since software as a service (SaaS) “can be a cost-effective delivery method for software functionality, it is rapidly gaining acceptance.” According to Tier 1, SaaS adoption in the CRM industry spearheads other SaaS software industries.
“The global growth story for the on-demand CRM market is clearly an exciting one,” said Wesley Kennedy, Senior Analyst at T1R and author of the report. “And while the rising tide will lift all boats, it is evident that some boats will rise higher than others. Those companies that are levered to the fastest-growing sections of the market will clearly be the greatest beneficiaries.”
T1R researchers highlighted that growth from European enterprises will be driven by the demand for point software applications as opposed to enterprise wide, more integrated business systems. Also, unlike the U.S. and Europe, many larger Asian enterprises have not yet adopted a CRM platform -- either on-premise or on-demand.
“The on-demand value proposition will be much more compelling for larger organizations in Asia,” the report’s authors project, adding that as a result, analysts expect larger enterprises to lead the way in terms of on-demand adoption, with smaller companies following suit 12-18 months later.
SaaS Appeal Reference Sources
- SaaS Business Solutions Source
- SaaS Defined by Government CRM
- SaaS Value Proposition
more helpful links