By Chris Kanaracus, IDG News

Global spending on SaaS (software as a service) will rise 17.9 percent this year to US$14.5 billion, according to figures released Tuesday by analyst firm Gartner.

Software as a Service Market to Grow: Platform as a Service to Follow

The spending rise is attributable to greater familiarity with how SaaS works, growth in related PaaS (platform as a service) offerings, and IT budgeting considerations, Gartner research director Sharon Mertz said in a statement. SaaS products are typically sold via subscription, allowing companies to avoid large up-front licensing fees and capital costs.

North America is the most mature and largest SaaS market, expected to generate $9.1 billion in revenue this year, compared to $7.8 billion last year.

Software as a Service Market to Grow Internationally

Western Europe’s SaaS spending will generate more than $3.2 billion in 2012, up from $2.7 billion in 2011.

In the Asia-Pacific region, for which Gartner excludes Japan, SaaS revenue will jump from $730.9 million in 2011 to $934.1 million this year.

Japanese companies will spent $495.2 million on SaaS this year, compared to $427 million last year, Gartner said.

CRM SaaS Sales are BIG in Japan: What about Platform as a Service?

SaaS sales in Japan will be driven by CRM (customer relationship management) and collaboration software, “which already have actual demand,” Gartner said. The 2011 earthquake has also raised interest in SaaS there as a possible defense against such natural disasters, according to the analyst firm.

SaaS spending in Latin America this year will be $419.7 million, compared to $331.1 million in 2011, Brazilian and Mexican companies will account for the majority of sales, with CRM, procurement and ERP (enterprise resource planning) applications the most popular choices, Gartner said.

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Meanwhile, Eastern Europe, the Middle East and Africa remain “small and emerging markets overall” with “ongoing infrastructure challenges,” Gartner said. Platform as a service sales may be slower here.

Read more about the Software as a Service Market to Grow from PC World HERE.