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Gartner Says Worldwide Software-as-a-Service Revenue to Reach $14.5 Billion in 2012; Analysts to Reveal Latest Global IT Spending Forecast on April 5(M2 PressWIRE Via Acquire Media NewsEdge) STAMFORD, Conn. -- Worldwide software as a service (SaaS) revenue is forecast to reach $14.5 billion in 2012, a 17.9 percent increase from 2011 revenue of $12.3 billion, according to Gartner, Inc. SaaS-based delivery will experience healthy growth through 2015, when worldwide revenue is projected to reach $22.1 billion. "After more than a decade of use, adoption of SaaS continues to grow and evolve regionally within the enterprise application markets," said Sharon Mertz, research director at Gartner. "Increasing familiarity with the SaaS model, continued oversight on IT budgets, the growth of platform as a service (PaaS) developer communities and interest in cloud computing are now driving adoption forward." Although growing interest has been observed in vertical-specific software, the most widespread use is still characterized by horizontal applications with common processes, among distributed virtual workforces and within Web 2.0 activities. "The top issues encountered when deploying SaaS vary by region," Ms. Mertz said. "Limited flexibility of customization and limited integration to existing systems are the primary reasons in North America. In EMEA, network instability is the issue most frequently encountered, whereas longer-than-expected deployments are the top issue in Asia/Pacific. Vendors are more aggressively pursuing SaaS buyers outside traditional markets by offering local-language availability, forming alliances and constructing data centers to accommodate local requirements." North America, specifically the U.S., currently represents the largest opportunity for SaaS, and it is the most mature of the regional markets. SaaS software revenue is forecast to total $9.1 billion in 2012, up from $7.8 billion in 2011. Consistent with other regions, North America shows the highest SaaS deployments in expense management, financials, email and office suites. Use of Web conferencing is higher in North America than in other regions, in part because of a highly distributed workforce. In Western Europe, SaaS revenue is forecast to surpass $3.2 billion in 2012, up from $2.7 billion in 2011, while SaaS revenue is Eastern Europe is projected to reach $169.4 million, up from $135.5 million last year. Gartner analysts said SaaS adoption in EMEA is currently running at two speeds. In Western Europe, the most developed subregion, SaaS offerings and adoption rates are rapidly increasing as North America-based SaaS vendors further penetrate the region and the number of local European SaaS vendors increases. In Eastern Europe and the Middle East and Africa, which are small and emerging markets overall, the potential opportunity for SaaS is more in the medium to long term due to ongoing infrastructure challenges that vendors need to overcome if they are to be successful in these regions. SaaS revenue in Asia/Pacific is on pace to reach $934.1 million in 2012, up from $730.9 million in 2011. Overall, SaaS adoption in Asia/Pacific has been fragmented. Asia/Pacific (excluding Japan) is a combination of mature markets, such as Australia, New Zealand, Hong Kong, Singapore, South Korea and Taiwan, and emerging markets, including China, India, Malaysia, Thailand, Indonesia, Vietnam and the Philippines. SaaS financial (accounting) applications are most popular, particularly in China and India. The next-highest SaaS usage is for ERP functions -- such as expense management and employee performance management -- followed by office suites, email and the CRM sales function. While the Japanese economy is still struggling and IT budgets are limited, the demand for SaaS solutions is increasing due to their lower implementation costs and faster deployment times. SaaS revenue in Japan is forecast to reach $495.2 million in 2012, up from $427 million in 2011. Gartner forecasts that growth of the SaaS market in Japan through 2015 will be led by CRM and email/groupware, which already have actual demand. Users have found that using SaaS reduces the burden of application management, increases the ease and agility of deployment, and reduces initial costs of implementation. In addition, since the 2011 earthquake and tsunami, users have looked to SaaS adoption as a defense against future power outages and disasters. However, many companies are still concerned about SaaS-related issues, such as data security risk, true cost-effectiveness and the difficulty of linking with other systems. SaaS revenue in Latin America is forecast to total $419.7 million in 2012, up from $331.1 million last year. In Latin America, SaaS has become most popular to deploy in the areas of email, financial management (accounting), sales force automation and customer service, and expense management. While regional adoption will be positive, it is fully expected that Brazil and Mexico will drive a majority of adoption and revenue opportunities. In the next two years, buyers are most likely to purchase SaaS solutions in packaged CRM, procurement and ERP applications. Gartner defines total software revenue as revenue from new licenses, subscriptions, and software maintenance and technical support services that include license sales to update/upgrade an existing license to a new version, telephone support and on-site remedial support. SaaS is primarily a software delivery and management approach that exists in established markets, such as CRM or ERP. Additional analysis is available in the Gartner report "Forecast: Software as a Service, All Regions, 2010-2015, 1H12 Update." The report is available at http://www.gartner.com/resId=1949616 . Gartner analysts will announce the latest overall worldwide IT spending forecast on April 5. The findings will be available on the Gartner Quarterly IT Spending Forecast site at www.gartner.com/quarterly-it-forecast . The forecast will include a breakout of IT spending by hardware, software, services and telecom. Contacts: Christy Pettey Gartner +1 408 468 8312 [email protected] Rob van der Meulen Gartner +44 0 1784 267892 [email protected] About Gartner: Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner to 60,000 clients in 11,500 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,500 associates, including 1,250 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com . ((M2 Communications disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. 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