7% CAGR for SaaS through 2012

Growth of hosted services, specifically hosted applications, or SaaS
(software as a service), as well as other services provisioned by a
third-party provider, are driving steady US managed services revenue
growth, reports In-Stat in its study, On-Demand Offerings Fueling US Managed Services Growth ($2,995). As most business
functions are still performed in-house by a majority of firms,
out-tasking the management of the network and related infrastructure
may still be considered a “trend.”  The hosted application model,
however, is closing in on becoming a “paradigm,” the high-tech market
research firm says.

“Though
business decision-makers have indicated that they plan to out-task
major business functions like security, storage, phone system
management, et al, at a moderate pace, adoption of third-party
application hosting is the fastest growing area in managed services,”
says Jeff Jernigan, In-Stat analyst. “The on-demand hosted application
model has seen acceptance in the small-to-medium business market, and
now demand is rising among enterprise-sized firms. The on-demand model
will also hasten adoption of utility computing services.”

Recent research by In-Stat found the following:

• In-Stat forecasts a 7% compound annual growth rate (CAGR), overall, for managed services through 2012.
• While
  a majority of business functions are still performed in-house, In-Stat
  research shows that convergence and complexity will aid in steady,
  yearly, managed services revenue growth.
• Adoption of
  managed services varies by business functions, size of business, and
  vertical market. Providers will need to tailor their managed services
  offerings accordingly.

In-Stat