An increasing number of organizations are demanding software functionality as a service (infrastructure as a service [IaaS], platform as a service [PaaS] and SaaS) or via cloud-based services rather than on-premises. As a result, vendors are offering more technology as subscription-based solutions and "pay as you go" offerings, positioning them as more cost-effective and as a way to counter the effects of economic belt tightening. SaaS and cloud-based services help vendors to expand revenue growth by making it easier for end users to test and evaluate new types of software, provision new users to current technologies, and migrate users off older versions to newer versions of software.

"After more than a decade of SaaS and cloud service use, adoption continues to grow and evolve within the enterprise application markets. This is occurring as tighter capital budgets demand leaner alternatives, popularity and familiarity with the model increase, and interest in SaaS and cloud computing grows," said Eid. "Adoption varies between and within markets. Although use is expanding to a wider range of applications and solutions, the most widespread use is still characterized by horizontal applications with common processes, among distributed virtual workforce teams and within Web 2.0 initiatives."

Eid said that the increase reflects overall market demand, with more buyers evaluating their options during the current technology refresh cycle, and returning buyer confidence for enterprise software as the market slowly recovers and organizations resume investing in technology. SaaS and cloud-based services are forecast to grow in usage, expanding from 11 percent of enterprise application spending in 2010 to 16 percent in 2015.