An increasing number of businesses are investing in Software-as-a-Service (SaaS) as the popularity of the delivery model continues to grow.

Research conducted by IDC indicates that the global industry is expanding by 25 per cent per year, pressuring existing business models within the enterprise IT market.

The company predicts that within just five years of 2009, the SaaS market will have expanded from a value of £8.4 billion to £30 billion.

Some 34 per cent of all new business software purchases will be consumed via SaaS by 2014, the study suggests.

Not only this, but IDC found that just 35 per cent of new products delivered by established software providers will come in the packaged format.

Robert Mahowald, vice-president for SaaS and cloud services research at IDC, said the SaaS model has become mainstream and is starting to dominate the planning of all software and services vendors.

"Enterprise IT plans are rapidly shifting to accommodate the growing choices for sourcing most or all IT software functions - from business applications to software development and testing, to service and desktop management, as SaaS services become available from established vendors," he said.

Another research consultancy, Gartner, claimed this month that SaaS spending will be 14 per cent higher in 2010 than last year.

Posted by Alex Boardman