You might say the software-as-a-service model is approaching the tipping point. In a forecast released today, IDC predicts that the SaaS market for enterprise applications and other software will reach $40.5 billion by 2014, growing at a 25.3% annual clip.
The market stood at $13.1 billion in 2009, according to IDC.
Sales of traditional packaged software and perpetual license revenue are declining, according to IDC, and the industry is shifting toward subscription models. This will produce a nearly $7 billion decline in worldwide software license revenue in 2010. “As a result, a permanent change in software licensing regime will occur,” IDC said.
IDC expects that, by 2012, nearly 85% of new software firms coming into the market will offer their products in the SaaS model. And by 2014, about 65% of new products from established vendors will be delivered as SaaS. In addition, in 2014, IDC predicts, SaaS will account for nearly 26% of new growth in the software market.