Synergy Research: Quarterly Enterprise #SaaS Spending Reaches $20 Billion, Grows 32% Per Year

The enterprise cloud SaaS market is now generating $20 billion in quarterly revenues for software vendors, according to New Q2 data from Synergy Research Group, a number that is growing by 32% per year. Microsoft has a worldwide market share of over 17% and is now the leading cloud SaaS vendor by some distance, having overtaken Salesforce nine quarters’ ago.

Enterprise SaaS

In many ways, the enterprise Software-as-a-Service (SaaS) market is now mature, stated Synergy Research. However, SaaS still accounts for less than 15% of total enterprise software spending and therefore remains small compared to on-premise software, meaning that cloud SaaS growth will remain buoyant for many years to come.

SaaS vs. IaaS and PaaS

While cloud SaaS growth rate isn’t as high as Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS), the SaaS market is substantially bigger and it will remain so for the foreseeable future. Synergy Research forecasts strong growth across all SaaS segments and all geographic regions.

Thanks primarily to its leadership in the high-growth collaboration segment, Microsoft’s annual SaaS revenue growth is running at 45%, far surpassing overall market growth. Salesforce remains the dominant player in CRM, but this segment is relatively low growth compared to other SaaS segments, enabling Microsoft to pull ahead in the overall SaaS market.

High Growth: Oracle

The two cloud SaaS leaders are followed by Adobe, Oracle, and SAP, with Oracle achieving the highest growth rate among these three. In aggregate these top five SaaS vendors now account for just over half of the market. The next ten vendors account for another 26% of the market. Among these ten, the vendors with the highest growth rates are ServiceNow, Google, ADP, and Workday. According to Synergy Research, it’s notable that the market remains quite fragmented, with different vendors leading each of the main market segments.

“There is a fascinating battle for SaaS playing out, with traditional enterprise software vendors slugging it out with born-in-the-cloud vendors like Workday, Zendesk, ServiceNow, and Dropbox,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “The latter group is helping to rapidly transform the market, but the more traditional players like Microsoft, SAP, Oracle, and IBM still have a huge base of on-premise software customers that they can convert to a SaaS-based consumption model. Meanwhile, Cisco and Google too are making ever-bigger inroads into the SaaS market, via Cisco’s collaboration apps and software vendor acquisitions and Google’s G Suite.”

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