2010 Forecast: Cloudy with Lots of Sun

This has been quite the week for financial results and predictions for the cloud computing and software market.

1. Gartner Group predicts 17% growth for cloud computing and SaaS firms vs. 4.8% for on-premises software for 2010.
2. Forrester Research says "The technology downturn of 2008 and 2009 is unofficially over" and points to growth in cloud computing in 2010.
3. Bruce Richardson of AMR says "If you had listened to me and invested in SaaS stocks in December 2008, your portfolio would be up 300% to 400% by now.
4. And closest to home, Intacct announces 80% growth and the second best quarter in the company's history - and that's quarter over quarter increased growth for an already fast-growing company.

Since the first of the year I've spoken with my counterparts at a wide variety of cloud computing and SaaS firms - and most of them also had unexpectedly, extremely strong and in many cases record breaking Q4's and are really bullish on 2010.

What does it all mean - everyone seems to agree that cloud computing and SaaS will continue very strong momentum in 2010. Cloud vendors grew many times faster than old style software in the teeth of the recession - largely driven by offering much better ROI and business value.

The breaking news is that the cloud vendors saw unexpected, dramatic acceleration last quarter as the market begins to come back and more buyers began to make decisions - and I don't believe the on-premises software companies saw the same dynamic. I think that this signals an inflection point in the shift from on-premises software to cloud-based applications - as the market comes back, the winds are roaring for cloud-based solutions.