INPUT expects the market for state and local government-oriented Software as a Service (SaaS) solutions to grow from approximately $170 million in 2008 to $640 million by 2013, earning a compound annual growth rate (CAGR) of 30.2% for the period, according to a recent SaaS report by INPUT, the authority on government business. This growth rate is far ahead of INPUT’s overall market CAGR of 6.4% for the same period. SaaS will see its market share grow from approximately 4% of the $6.5 billion state and local software market in 2008 to approximately 11% of the $8.9 billion market in 2013.
“While this represents aggressive growth, the state and local market will still lag well behind private-sector adoption rates. This is partly due to cultural resistance as well as a lack of tools tailored specifically to the wide variety of government-specific business processes,” said Jason Sajko, senior analyst for general government services at INPUT. “That sort of tailoring will tend to come after larger vendors have begun bumping up against the limits of their private-sector market reach and begin looking for new niches.”