SaaS market to increase by 2014 says IDC

The Software as a Service (SaaS) market will continue to grow within the next three years, according to IDC.

In its “Worldwide Software as a Service 2010–2014 Forecast: Software Will Never Be the Same” report the analyst company said there were worldwide revenues of $13.1 billion in 2009. However, it said this would grow and reach $40.5 billion by 2014, which it said represented a compound annual growth rate of 25.3 percent.

By next year IDC reckons less than 15 percent of net-new software firms coming to market would ship a packaged CD product and by 2014, about 34 percent of all new business software purchases would be delivered via SaaS, and SaaS. It said this would total around 14.5 percent of worldwide software spending.

According to the company nearly 85 percent of net-new software companies will be built around a SaaS model. By 2014 IDC also predicted that around  65 percent of new products from established ISVs will be delivered as SaaS services while SaaS revenue will account to nearly 26 percent of the net new-growth in the software market in 2014.

Traditionally packaged software and perpetual licence revenue would be in decline by 2014, says IDC. It added that the software industry shift toward subscription models would result in a nearly $7 billion decline in worldwide licence revenue in 2010.