Providers of hosted services continue to launch new offerings in the Australian market with research released today showing the Software as a Service (SaaS) model is growing at a compound annual growth rate of 65 percent and is set to top $506 million by 2010.

Growth in the Australian market is attributed to a growing awareness of the SaaS model. Springboard Research shows awareness has jumped 31 percentage points over the last year.

The results of the study were released on the back of more hosted services being launched in Australia this week.

For example, TPP Internet announced its hosted Microsoft Exchange 2007 service for as little as $20 per mailbox per month.

The domain registration company joins a long list of companies that have launched SaaS offerings in the past 18 months taking on traditional players such as Salesforce.com, WebEx, Oracle, RightNow and NetSuite.

TPP Internet provides business grade e-mail, shared calendars, tasks and contacts all automatically synchronised with desktops, PDAs, smart phones and mobile laptops.

TPP marketing director, Chris Collinge, said the service is offered in real time without having to buy, manage and maintain all the servers and infrastructures, which is ideal for the small to medium business sector.

Collinge said the company made the decision to host Exchange 2007 rather than Exchange 2003 because of the additional features.

He said e-mail has become a high demand application that requires around-the-clock availability.

"To stay competitive in today's business environment, businesses need sophisticated messaging tools with features like mobile access and shared calendars. Yet these tools come with complex needs for implementation, management and support," Collinge said. "Small to medium organisations face the same digital communication challenges as large enterprises, but often lack the internal resources and capabilities to address them.

"This is particularly true for businesses with fewer than 50 employees who have a limited IT department or no IT department at all." TPP utilises a hosting infrastructure and features include user authentication and multiple levels of password authorisation, daily backups stored securely offsite, encryption of data during network transit and storage. Springboard Research ANZ country manager, Phil Hassey, said escalating IT expenditures and increasingly complicated IT systems, are even forcing enterprises to adopt the SaaS alternative.

"Enterprises have found a spin-off benefit with the opportunity to cut down on expensive in-house or outsourced IT personnel, compared to the traditional software model where implementation and software upgrades cost more money and time," Hassey said.

While IT departments remain firmly in control of software deployments in large organizations, business users are emerging as key influencers of SaaS adoption within many companies in ANZ, according to Springboard Research.