The World Loves SaaS

By Beth Cooper, January 4, 2017

Although there is variation in the forecasts, there is no doubt that the software as a service market is growing and growing fast. One reason often cited as the shift to cloud solutions is business confidence in such services increasing, but cost is also a factor.
Traditional in-house approaches to software storage and management, business processes, and on premise systems infrastructure are losing ground. Gartner predicts that by 2020, cloud shift will affect more than $1 trillion in IT spending.
Figures for 2016’s growth in the SaaS market are expected to reach 20%. Within six years it is predicted that the overall market will exceed $160 billion. Buried in these massive sums are statistics on the Customer Relationship Management (CRM) share of this expenditure.

The global CRM market

Currently, Salesforce is the dominant player, with circa 20% of the market share. Between them, SAP, Oracle, Microsoft and Adobe account for a further 26%. Interestingly, although total revenues grew by 12.3% in the CRM market during 2015, Gartner’s Julian Poulter notes that the “growth is driven by cloud-service revenue, which, in the application space, uses SaaS as the major delivery model” and further that “on-premise licence revenue declined 1 percent for the same period.”
Looking at the trends in worldwide spending, the North American market continued as the dominant share, but the fastest growth was seen in the emerging Asia/Pacific markets, in China and to lesser – but still significant – extent in North Africa, the Middle East and the mature Asia/Pacific markets.

The driving forces

The world has changed and it’s still changing at a pace we couldn’t have imagined a few decades ago. To remain relevant and competitive, businesses must become agile and responsive.
Consumers who have grown up with digital technology to hand, who have enthusiastically embraced each shift in capability, processing power and connectivity will not tolerate being held back by legacy systems and sluggish investment strategies.
While users want faster, better, smarter systems, new entrants to markets and seismic shifts in global trade have magnified the need to control spending. In-house systems are expensive to develop, support and maintain.
Furthermore, users of in-house systems are unable to benefit from collective genius of a whole world of users’ innovative ideas. Collaboration is accelerating change. Putting it crudely, if you’re not in the game, you can’t share the winnings.

Forecasting the future

SaaS in no longer the new kid on the block, and although still in a strong growth position, the market is amongst the most mature of the cloud-based segments. Platform as a service and infrastructure as a service are also growing rapidly. Those looking after IT budgets have more options than ever before to deliver first-class, scalable solutions to their business without prohibitive up-front investment.
We don’t know the future, but we’re excited by it.