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December 15, 2009

River Cities SaaS Benchmarking Report – 2009

SaaS represents a transformational business and delivery model in the IT sector. Growing, but underpenetrated, the SaaS market achieved $9 billion in 2007 revenue and is expected to see 23% CAGR, reaching $19 billion in 2010. For comparison, the global software market generated revenues of $203 billion in 2006 and is forecasted to grow 6%, achieving $271 billion in revenue by the end of 2011. Considering the SaaS market potential exceeds 40% of the overall software market, the addressable SaaS market size is estimated to grow to $110 billion by 201. While the SaaS business model expands the overall software application addressable market, a large portion of the sector’s growth will come from cannibalization of traditional software models. Nonetheless, software vendors have started and will continue to deploy significant resources towards a SaaS initiative. However, pure play SaaS providers will continue to demonstrate higher growth rates than traditional software companies, since a significant amount of growth from SaaS for traditional software companies will cannibalize their onpremise deployments.

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