SaaS Spending Exceeds Expectation.As IDC report indicates that the Worldwide spending on software as a service (SaaS) reached $4.2 billion in 2004, an increase of 39% over 2003 according to a recent IDC study. IDC believes worldwide spending on SaaS will continue to increase over the next five years at a 21% compound annual growth rate (CAGR), reaching $10.7 billion in 2009Some interesting Excerpts from the report:

• There is no doubt that software as a service has become a driving force within the software industry," said Erin Traudt, research analyst, Software as a Service research at IDC. "Indications are that customer adoption will continue over the next five years and spending will remain on the rise."
• IDC believes software as a service adoption will be driven by customer need to improve business processes, an increased understanding of and interest in the software as a service delivery model, growth in the number of software as a service offerings, and the creation of enablement programs to help independent software vendors (ISVs) take advantage of the software as a service opportunity. Buyers from small and medium-sized businesses and divisions of larger companies are leading the charge as the most frequent customers of software as a service.
• "The software industry must adopt a new frame of reference for value creation," added Traudt. "Software as a service delivery is at the forefront of this trend, and adoption will grow as more customers experience software as a service and the offerings mature, becoming more readily accepted and available in the market."