March 1, 2011 – Revenue and salaries in the software as a service field has leapfrogged ahead of the overall economic recovery, according to a new report from research and consulting organization, Service Performance Insight Research (SPI).

SaaS professional services outpaced growth expectations last year and have rebounded from setbacks in 2009, SPI wrote in its fourth-annual report, “The 2011 Professional Services Maturity Benchmark.” The report culled information from more than 600 SaaS businesses across nine professional services markets: accounting, advertising, architecture and engineering, IT consulting, management consulting, and services within software companies and human resources organizations.

Year-over-year revenue growth for SaaS enterprises in 2010 registered at 7.6 percent, a full percentage point ahead of headcount growth and previous assessments from SPI. In one category, 19 of the 214 reporting SaaS organizations led the report with more than 23 percent overall net profit in 2010. In eight other industry segments, the average net profit was 6.6 percent, according to the report.

SPI managing director Jeanne Urich says nearly 40 percent of organizations regardless of size expressed a preference in using SaaS-based solutions for professional services. Part of that push has been from the increase in cloud deployments, which more than half of respondents in the report stated they anticipated to happen within the next two years.  

“While SPI Research does not believe over 50% of [professional service organizations] will in fact run a majority of their applications on the cloud that soon, there is no doubt this trend is gaining momentum and SaaS will become the primary method of PS application consumption within five years,” Urich says.

SaaS providers embedded in organizations outperformed independent providers, logging an average 7 percent increase in bill rates for 2010, SPI reported. New accounting standards forced embedded SaaS organizations to unbundle professional services and maintenance fees, and caused them to “shift from cost centers to profit centers,” Urich says.

Throughout SaaS organizations, salaries increased 11 percent in 2010 from the previous year, following three years of layoffs and pay freezes.

Widespread interest and adoption of SaaS are expected to keep SaaS revenue on the uptick, according to SPI researchers.

Corporate sponsors for the report are ProjectorPSA, FinancialForce, Citrix, Intacct, Microsoft and OpenAir/NetSuite. The report is available for download here for a fee.

Click here to read more on spending trends in SaaS from Information Management.


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