Enterprise spending on cloud will increase by 19 per cent this year, as Software as a Service (SaaS) becomes a must-have investment.

This is according to Gartner cloud forecaster Ed Anderson, who believes cloud computing will be worth $109 billion (£70 billion) by the end of the year. Furthermore, should businesses continue to see value in technology like cloud hosting, the market could be worth $207 billion (£132 billion) by 2016, according to Anderson.

In Gartner's latest report, Anderson stated that spend on SaaS and Infrastructure as a service (IaaS) is expected to drive this high level of growth. According to cio.co.uk, IaaS spend will increase by 41 per cent over the course of 2012, while SaaS was listed as another key cloud growth area - with a 17.5 per cent hike predicted.

Spend on management and security is also expected to rise, by a predicted 27.2 per cent, with Platform as a service (26.6 per cent) and business process as a service (15 per cent) completing the top five investments.  

While this is good news for cloud providers, companies offering traditional hardware may have to alter their lines. According to computerworld.com.au, Gartner sees computing hardware sales increasing, but only by 3.4 per cent to eventually reach $420 billion (£269 billion).  

On the other hand, overall spend on enterprise software is expected to reach $281 billion (£180 billion) at the end of 2012, but will progress at a faster rate - of 4.3 per cent.