The State of SaaS in 2015: Global Market Trends, Growth Forecasts, Industry Reports

If you’re looking for the latest market data and trends check our 2016 SaaS Industry Market Report.

reportMarket analysts consider 2014 as the base year for SaaS, the period of standardization and adoption when the infrastructure from both the developers’ and consumer’s ends had stabilized to grow the seeds. So what was the state of SaaS 2015? If we sum up the myriad analyses, reports, and studies on cloud computing with emphasis on the SaaS market from research and consulting bodies, it’s the year of validation that everything only points upwards for this industry.

We rounded up studies from high-profile industry observers, such as Forrester, Gartner, The Economist, and from industry players like Cisco and BCSG to give you the big picture of the state of SaaS 2015.

Here are the key takeaways:

  • SaaS continues to dominate cloud computing, but PaaS is key to sustaining the whole industry’s growth rate
  • North America is still the largest SaaS market, but Asia Pacific has the fastest-growing growth rate
  • Cloud computing will be the biggest technological disruption to how businesses are run in the next three years with the most impact in the US and China
  • Public cloud SaaS is the fastest growing deployment model
  • Amazon Web Services has more than half the IaaS market
  • Salesforce tops the global SaaS market
  • More small and medium businesses are adopting cloud apps with an average of 3 SaaS solutions per company

To help you digest the bits and pieces of industry data, let’s take a look at the 2015 SaaS trends from three perspectives: industry trends, business and marketing trends, and technology trends.

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INDUSTRY TRENDS

Overall growth

SaaS continues to dominate public cloud marketplace through 2018. Cloud services in general will hit $244 billion in 2017, according to Gartner analysts.

Meantime, global SaaS market earmarked $49 billion in 2015 based on a Technology Business Research study. The figure is expected to reach $67 billion by 2018 with a compound annual growth rate of 8.14%

However, PaaS is critical to the overall cloud marketplace growth, according to the report, which is expected to hit $34 billion in 2018, registering 32% growth rate from 2015, the biggest among the three cloud industries over the period. The report also estimates that $16.5 billion was spent on Infrastructure-as-a-Service last year, up nearly 40% from 2014.

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Source: Technology Business Research Inc.

North America is still the top SaaS market

The region continues to have more than half the slice of the global SaaS market backed by the widespread use of SaaS apps in HCM, emails, office suites, and web conferencing, according to Transparency Market Research. Moreover, cloud apps for smartphones, tablets, and Chromebooks continue to fuel the North American market

Meanwhile, Europe accounts for the second biggest SaaS market, mainly driven by Western European countries such as UK, France, and Ireland, which are also the three countries witnessing huge SaaS investment in 2015.

But perhaps the most interesting region today for SaaS vendors is Asia Pacific, which has the fastest SaaS growth rate, according to the same report.  

In fact, the report detailed that SaaS vendors are going overseas and tapping another high-growth industry to sustain growth. The business outsourcing industry based in developing countries such as India, the Philippines, and Eastern Europe bolsters SaaS growth in light of sluggish sales and slower expansion rate in the domestic market (North America). Meanwhile, rising infrastructure and network capabilities in the Asia-Pacific Region continue to sustain strong growth in the global SaaS market

Demand for mobile SaaS continues to increase

Due to increasing number of individuals in the mobile workforce, mobile SaaS took flight last year. In fact, cloud data dominates mobile traffic. The Cisco VNI Mobile 2015 report forecasts that 90% of mobile data traffic will come from cloud solutions by 2019, a jump from 81% in 2014. What’s spurring cloud mobile consumption? Video and audio streaming, online gaming, and online storage, among others, are the top factors driving the engine, according to the Cisco report.

Source: Cisco VNI Mobile, 2015

Source: Cisco VNI Mobile, 2015

TECHNOLOGY TRENDS

Cloud computing will be the most disruptive technology in the next 3 years

Cloud computing–which groups together SaaS, IaaS, and PaaS–will comprise 11% of overall technological disruption that enables “the next indispensable consumer technology,” according to KPMG’s 2015 Global Innovation Survey. Cloud computing impact is most pronounced in China (15%) and the US (14%) through the period.

The same study reported that cloud computing will “drive business transformation in enterprises over the next three years in the US,” alongside data and analytics and cyber security.

Source: KPMG ‘s 2015 Global Innovation Survey

Source: KPMG ‘s 2015 Global Innovation Survey

Public cloud SaaS is the fastest growing deployment model

Public cloud SaaS is driven by continuous growth in social networking, search, ecommerce, and email trends, according to Transparency Market Research. The same trends are fueling the overall SaaS market for both small businesses and large companies through 2022. The other SaaS models are private cloud and hybrid (both public and private).

However, a Forrester report noted an increase in private cloud SaaS adoption in the US (5%), Canada (2%), and Germany (3%). On the other hand, private cloud adoption decreased in the UK (7%) and France (6%).

Amazon Web Services (AWS) tops cloud infrastructure platforms

Amazon is reaping more fruits than other players in cloud computing market. IT architects and deveopers are four times more likely to use AWS as their app platform than the next most popular enterprise public cloud, Microsoft Azure IaaS, according to a RightScale study. At 57% adoption, AWS dominates the public cloud usage for enterprises, including SaaS vendors. Rounding up the top five are Azure IaaS (12%), Rackspace Public Cloud (11%), Azure PaaS (9%), and Google App Engine (8%).

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Source: RightScale 2015 State of the Cloud Report

BUSINESS AND MARKETING

Salesforce tops SaaS global market share

If Amazon has the industrial cloud computing in its pocket, Salesforce has the consumer end. The company enjoys 10.8% of the SaaS market worldwide, followed by Microsoft at 7.9%, according to Statista for the first half of 2015. But more vendors are expected to crowd the SaaS marketplace putting more pressure to the top players.

SaaS as a strategic platform to drive sales

Beyond an IT model, cloud strategies are being used by most mature companies to grow customer demand and expand sales streams, according to The Economist Intelligence Unit study, which maps the growth of cloud adoption through 2015. On the other hand, slow cloud adopters are found to focus on improving internal business process and reducing costs instead of growth.

More companies defining their IT resources as OPEX

Many companies find IT capitalization not only costly but inefficient to deal with fast technological turnarounds. This limits their ability to reap a competitive edge from newer solutions, reported Transparency Market Research. Last year, more companies “discovered” that SaaS allows them to be more efficient in addressing constant shifts in business requirements. Specifically, it allows companies to scale their IT resources and deploy them at once based on month-to-month business needs. According to the report, one of the main benefits that companies, especially small and medium businesses, like about cloud computing is the convenience of not thinking about system installation, deployment, and maintenance.

Cloud apps continue to see small and medium businesses (SMBs) adoption

64% of SMBs are now using cloud-based apps, based on a BCSG study. By 2017, adoption is expected to increase to 88%. Similarly, SMBs last year were using an average of three cloud apps, which is predicted to jump to seven by next year.

SMBs is proving to be a profitable niche for many SaaS vendors. In fact, the report noted that “a growing segment of the technology sector is focused on building software that purely addresses the needs of small businesses.” The most popular cloud solutions for SMBs include collaboration (98%), financial management (94%), and managing customers (92%), the report adds.

Here’s a hint to SaaS companies that market to SMBs: “Small businesses have told us that they are 45% more likely to consider cloud services if a big, established organisation was involved,” the BCSG study reports.

CONCLUSION

The SaaS industry is an unstoppable freight train that can only move forward. However, although the industry enjoyed an upswing in 2015, and is expected to grow at a staggering rate through 2022, the devil is in the details. As more players come into the picture competition will only heat up to boiling levels. In order to stay competitive many SaaS vendors turn to review platforms like FinancesOnline to promote their product and reach out to a growing base of users visiting such sites in search for realiable information about B2B software. If you want to get your product listed in our directory you can easily add your product to our listing here.

Likewise, issues remain that impede the full growth potential of the market, such as: data security, privacy, internet connectivity in underdeveloped markets, and limited integration. The impact of the last two issues, however, is expected to diminish as SaaS companies continue to work on offline capabilities and more software integration options.

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