Quarterly SaaS Spending Reaches $20 billion as Microsoft Extends its Market Leadership

RENO, NV, August 21, 2018

New Q2 data from Synergy Research Group shows that the enterprise SaaS market is now generating $20 billion in quarterly revenues for software vendors, a number that is growing by 32% per year. Microsoft has a worldwide market share of over 17% and is now the leading SaaS vendor by some distance, having overtaken Salesforce nine quarters’ ago. Thanks primarily to its leadership in the high-growth collaboration segment, Microsoft's annual 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. The two 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. It’s notable that the market remains quite fragmented, with different vendors leading each of the main market segments.SaaS Q218 In many ways the enterprise SaaS market is now mature. However, SaaS still accounts for less than 15% of total enterprise software spending and therefore remains small compared to on-premise software, meaning that SaaS growth will remain buoyant for many years to come. While SaaS growth rate isn’t as high as IaaS and PaaS, the SaaS market is substantially bigger and it will remain so for the foreseeable future. Synergy forecasts strong growth across all SaaS segments and all geographic regions.

"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 are 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.”

About Synergy Research Group

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database tool, which enables easy access to complex data sets. Synergy’s CustomView ™ takes this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

Synergy Research Group helps marketing and strategic decision makers around the world via its syndicated market research programs and custom consulting projects. For nearly two decades, Synergy has been a trusted source for quantitative research and market intelligence. Synergy is a strategic partner of TeleGeography.

To speak to an analyst or to find out how to receive a copy of a Synergy report, please contact Heather Gallo at hgallo@srgresearch.com or 775-852-3330 extension 101.