The software as a service market is expected to grow from US$ 167.53 billion in 2022 to US$ 462.94 billion by 2028; it is anticipated to grow at a CAGR of 18.5% from 2022 to 2028.
SaaS applications have the potential to cater services to small, medium, and large enterprises efficiently. Organizations today are growing rapidly, and they require operations to scale up as per the demand. With the ease in scalability feature offered by the SaaS model, many organizations seem to adopt the SaaS model for their various operations, be it managing their IT infrastructure, financial management, human capital management, asset monitoring, or any other useful domain. Adopting such a modular structure that can scale up the IT infrastructure, storage, computing, fabric, and virtualization in a single architecture is being rapidly adopted across the globe, offering lucrative business opportunities to the global software as a service market players. The flexibility offered by SaaS models gives a competitive advantage to companies by quickly adjusting to customers' demands and making the necessary changes in operations efficiently. High efficiency has become a prerequisite for leading companies today, and the deployment of SaaS models gives them the power to be flexible and efficient. The tools utilized by SaaS vendors are typically more robust and up-to-date than those available to most local organizations. These factors are influencing the software as a service market growth.
Also, SaaS vendors make use of redundant servers to back up data. Thus, in case of any malfunction in the cloud, users are automatically redirected to a backup server without any performance issues. Furthermore, SaaS vendors perform regular data backups. Since there is a single version of the software, more vendor resources are typically directed to identifying issues/bugs and the related patches/fixes required to address those concerns. These factors are further propelling the software as a service market growth.
SaaS is an advanced technology transforming traditional on-premise software systems into a modern cloud-based solution globally. Along with reduced efforts of running a process and installing and purchasing software, it also helps an organization minimize costs and maximize revenue. Consequently, private organizations worldwide have understood the potential behind these services and come up with cloud-based services. These factors are boosting the growth of the market.
With the growing concerns for security and privacy of data, private cloud deployment model was developed but that proved to be very costly. All the data of organizations cannot be mission critical and sensitive. Various type of data demands for varying levels of security. The flexibility of storing less critical data over public cloud while mission critical data over hybrid cloud makes it highly attractive for organizations to adopt. Banking sector that has to store large amounts of sensitive data is the most benefitted business segment due to the introduction of hybrid cloud deployment model. Hybrid cloud model is thus expected to grow at a rapid pace during the forecast period, offering lucrative growth opportunities to the hybrid software as a service market share.
Regional Analysis of Software as a Service Market
From the regional perspective, North America held the largest share of the global software as a service market in 2021. With the increasing customer demand for high-quality products and services, North American companies are constantly innovating to serve their customers in the best possible way. This is increasing the demand for solutions such as CRM and ERP. Additionally, the presence of SaaS vendors such as Microsoft Corporation, Amazon Web Services, Symantec Corporation, IBM, ORACLE, ADP LLC, Workday, and Google across the region is further contributing to the rapid growth of the market.
Lucrative Regions – Software as a Service Market Share
Market Insights – Software as a Service Market
Based on application, the software as a service market is segmented into customer relationship management (CRM), enterprise resource planning (ERP), human resource planning (HRP), supply chain management (SCM), and others. The CRM segment accounted for the largest share of the global software as a service market in 2021. With its numerous advantages, SaaS CRM has successfully changed organizations' perceptions about how front-office software systems are used and controlled. Particularly for CRM, the SaaS applications provide various benefits like best-in-place infrastructure without the need for capital expenditure, lesser implementation and integration times with existing systems, software upgrades without any significant bottleneck, consistent system uptime, and 24/7 staffing. It actively tracks and manages customer information, captures customer emails, simplifies repetitive tasks, and delivers instant insights and recommendations. As the business grows, CRM helps in customizing functions. According to Salesforce—one of the prominent CRM providers—the solutions on an average help their clients enhance their sales by 30%, and there is a 40% increase in customer satisfaction. These factors are further contributing to the growth of the segment.
Players operating in the software as a service market are mainly focused on developing advanced and efficient products.
- In December 2022, Microsoft Corporation announced its 10-year partnership with LSEG to offer data analytics and cloud infrastructure solutions.
- In November 2022, shadow announced the launch of its new cloud storage service named shadow drive.
The software as a service market is segmented into five major regions—North America, Europe, Asia Pacific (APAC), Middle East & Africa, and South America. In 2021, North America led the market with a substantial revenue share, followed by Europe. Further, Asia Pacific is expected to register the highest CAGR in the software as a service market from 2022 to 2028.
The key global software as a service market players include ADP LLC, Amazon.com Inc, Google Inc, IBM Corporation, Microsoft Corporation, Oracle Corporation, Salesforce.com Inc, SAP SE, Fujitsu Limited, and Workday Inc.