Gartner predicts that the global software-as-a-service market will grow by 14.1% this year to $8.5 billion, with the delivery model taking a 26% share of total CRM sector revenues.
SaaS accounted for 24% of total CRM sales last year, with penetration levels ranging from between 11% and nearly 40% depending on the sub-segment.
Sharon Mertz, a research director at the firm, said: "The market landscape for on-demand CRM continues to evolve and mature as the availability and use of SaaS solutions becomes more pervasive. Greater market competition and increased focus by the mega-vendors reinforces the legitimacy of on-demand, mitigating initial objections about security and availability for many."
She added that that penetration levels of SaaS across all enterprise application software sectors was also expected to grow from 10% last year to more than 16% in 2014.
After being around for more than a decade, adoption of the model varied between and within markets. But "although use is expanding to a wider range of applications and solutions, the most widespread use is still characterised by horizontal applications with common processes among distributed virtual workforce teams and within web 2.0 initiatives," Mertz said.
Despite widespread claims made to the ‘cloud computing’ moniker, however, only 75% of SaaS offerings in revenue terms could be considered as true cloud services, although the figure was likely to increase to 90% by 2014 as the SaaS delivery model continued to mature.
While Mertz pointed out that some "attrition" had taken place in the market last year as a result of staff cuts, most SaaS vendors had increased their revenues and she expected adoption to "far outpace" on-premise software sales until 2014.