UK SME SaaS market worth £500m by 2015

UK small businesses are forecasted to spend over half a billion pounds on software-as-as-a-service (SaaS) products by 2015, according to research.
 
The study found that, last year, UK SMEs spent £203 million on SaaS. The market is forecasted to grow to £547 million over the next three years.
 
When counting traditional software as well, the UK SME market for business application software was £1.6 billion in 2011. This is projected to grow to £2.1 billion by 2015.
 
The investigation found that fast growing start-ups, enterprises expanding overseas, and subsidiaries of international companies expanding into the UK, would present the strongest opportunities for business applications and SaaS suppliers.
 
Key investment areas include CRM, analytics, mobility and industry-specific software, according to the research by analyst firm Pierre Audoin Consultants (PAC).
 
"There are significant differences in the positioning of vendors by company size. Although Sage is the undisputed giant of the UK SME market, it is not as strong in the upper mid-market and faces tough competition from the likes of IRIS Software in the SOHO segment," said George Mironescu, senior consultant at PAC.
 
He added that the SME market is entering into a major phase of transformation as buyers are increasingly attracted to cloud-based services that enable them to access enterprise-class functionality on affordable and flexible commercial terms.
 
While the UK SME SaaS market is expected to more than double its size by 2015, Mironescu warned that SaaS is a “work in progress for many ISVs, with established players wary of cannibalising existing revenue streams."
 
Of the top 20 applications vendors servicing UK SMEs, PAC rated only Salesforce.com and Fidessa as currently having a "mature" SaaS proposition.