Like its Web services (define) cousin, software as a service (SaaS), in which applications are piped over the Internet at a customer's behest, has snowballed in popularity.
Companies like Salesforce.com, Siebel, Grand Central Networks and Rearden Commerce are charging into the market opportunity, proposing automated software delivery methods as an attractive alternative to the traditional method of buying packaged applications and downloading them.
Buyers from small and medium-sized businesses (SMB) and divisions of larger companies are the most frequent customers of software as a service, according to IDC.
Traudt said in her report that software as a service will grow steadily at more than 20 percent a year until it tops $10.7 million by 2009. Growth will be driven by new products, customer goals to boost business processes, and new programs to help independent software vendors (ISVs) write software as a service.
Salesforce.com and Siebel are among the first companies to find success with the SaaS distribution model.
Grand Central is another. It offers software integration on-demand.
Rearden launched last winter, professing to be an "Internet concierge" that brings services to corporate employees on demand.