By 2018, 27.8% of the worldwide enterprise applications market will be SaaS-based, generating $50.8B in revenue up from $22.6B or 16.6% of the market in 2013. IDC estimates the overall enterprise applications market in 2013 was $135.9B.
These and other insights are from IDC’s Worldwide SaaS Enterprise Applications 2014–2018 Forecast and 2013 Vendor Shares written by Christine Dover, Research Director, Enterprise Applications and Digital Commerce.
“Demand for SaaS enterprise applications is accelerating and exceeding the demand for on-premise applications by five times (during the five-year forecast period through 2018, SaaS revenue is forecast to grow at 17.6% CAGR, while on-premise revenue growth is only forecast at 3.1%). Generally, wherever new enterprise application software is required, the expectation is that SaaS applications are preferred, particularly for customer relationship management and enterprise resource management applications. However, most of the enterprise software currently in use today and in the near future remains on-premise, particularly in the areas of supply chain, manufacturing, and engineering,” says Christine Dover, research director, Enterprise Applications and Digital Commerce.
- IDC predicts the worldwide SaaS CRM applications market will be worth $19.8B by 2018, attaining a CAGR of 19.6% in the forecast period. On-premise CRM enterprise applications are projected to drop from $14.7B or 64.6% of the market in 2013 to $12.1B or 38% in 2018, attaining a negative CAGR of -3.90%. The following graphic illustrates these forecasts for worldwide CRM applications revenue share:
- The worldwide CRM enterprise applications market is projected to grow at a CAGR of 6.9% in the forecast period, increasing from $22.8B in 2013 to $31.8B in 2018.
- IDC forecasts the SaaS Enterprise Resource Planning (ERP) market will reach $23.8B in 2018, attaining a 17.2% CAGR in the forecast period. In 2013, 23.5% of worldwide ERP revenues were SaaS-based, projected to increase to 15.2% of all ERP application revenue by 2018. On-premise ERP revenues in 2013 were 76.5% to the worldwide market, projected to drop to 61.50% in 2018.
- The worldwide SaaS operations and manufacturing applications market will reach $5.8B by 2018, attaining a CAGR of 13.7% in the forecast period. As of 2013, 7.3% of operations and manufacturing enterprise applications were SaaS-based, forecast to increase to 10.30% of this total market by 2018.
- The worldwide SaaS supply chain management applications market will reach $690.9M by 2018, attaining a CAGR of 14.1% by 2018. IDC defines supply chain management as including the functional markets of inventory management, logistics, and production planning. 4.1% of enterprise supply chain management applications were SaaS-based in 2013, projected to increase to 6.10% in 2018. On-premise supply chain management applications were 95.9% of the market in 2013, projected to drop to 93.9% of the market by 2018.
- The worldwide SaaS enterprise applications market will grow at a compound annual growth rate (CAGR) of 17.6% for the five-year forecast period, reaching $50.8B in 2018. On-premise enterprise applications’ share of market will drop from 83.4% in 2013 to 72.20% in 2018, attaining a negative compound annual growth rate of -2.84%. The following graphic shows SaaS and on-premise forecasts:
- IDC’s analysis shows that Salesforce.com (NYSE:CRM), ADP, Intuit, Oracle and SAP represented 35% of the worldwide SaaS enterprise applications market in 2013. According to IDC’s 2013 market estimates, Salesforce had a 14.3% market share of the SaaS enterprise applications market, followed by ADP (6.4%), Intuit (5.8%), Oracle $4.8%) and SAP (4%). Percentage of revenue derived from SaaS is 100% for Salesforce, 93.5% for ADP, 66.10% for Intuit, 12.4% for Oracle and 7.3% for SAP.
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