Software-as-a-service (SaaS) sales are expected to reach $12.1bn in 2011, an increase of 21% compared to $10bn in 2010, according to research firm, Gartner.
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According to Gartner's latest figures, SaaS will comprise almost a third (32%) of the total customer relationship management (CRM) software market in 2011, accounting for $3.8bn in 2011, an increase from $3.2bn in 2010.
"The market landscape for on-demand CRM continues to evolve and mature as the availability and use of SaaS solutions become more pervasive," said Tom Eid, research vice-president at Gartner.
Tom Eid added that tighter budgets and increased familiarity with the SaaS model were driving adoption in enterprise applications markets.
"Initial concerns about security, response time and service availability have diminished for many organisations as SaaS business and computing models have matured and adoption has become more widespread," Eid added.
Sales in the content, communications and collaboration (CCC) market are expected to reach $3.3bn in 2011, up from $2.8bn in 2010.
"The CCC market continues to show the widest disparity of SaaS revenue generation, with SaaS representing just 5% of enterprise content management (ECM) in 2010 but approximately 83% of web conferencing," said Eid.
Enterprise resource planning (ERP) SaaS sales are the lowest in the market, making up only 7% of the overall ERP market. Gartner predicts ERP SaaS sales to reach $1.7bn by the end of 2011.
Gartner expects the SaaS market to grow to reach $21.3bn by 2015 with 90% of sales being regarded as cloud services.