cloud-computing-governmentSaaS business is booming, according to Gartner.  Analysts estimate a 17.9% increase in SaaS revenue in 2012 and anticipate that worldwide revenue will reach $14.5 billion later this year. Further, SaaS-based delivery is expected to grow steadily through at least 2015, when it is projected that revenue will reach more than $22 billion per year.

After more than a decade of use, adoption of SaaS continues to grow and evolve regionally within the enterprise application markets,” said Sharon Mertz, research director at Gartner. “Increasing familiarity with the SaaS model, continued oversight on IT budgets, the growth of platform as a service (PaaS) developer communities and interest in cloud computing are now driving adoption forward

According to the report, North America represents the largest SaaS market, even with the push toward paperless processes that’s been taking hold throughout Europe.  North America represents more than $9.1 billion of the overall total, with expense management deployments leading the pack as companies become increasingly interested in managing indirect spend and making use of expense management software.

Europe comes in second, but is proving to be more regionally divided. Western Europe is being targeted by American SaaS providers looking to expand business across the Atlantic and is expected to account for approximately $3.2 billion of this year’s SaaS totals. Europe’s eastern contingent, however, continues to be challenged by infrastructural weaknesses that have slowed SaaS growth.

Gartner also reports that the biggest SaaS challenges faced in North American deployments are primarily caused by integration and customization issues. Though some providers offer extensive configuration options and simplified integration with existing systems, the level of customization varies, making research into potential SaaS providers vital for a smooth deployment.

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