Enterprise SaaS Market Hits $15 Billion in Q2 2017

Collaboration is the highest growth segment in enterprise software-as-a-service, according to new data from Synergy Research Group, with Microsoft, Cisco and Google the leading vendors in the space for Q2 2017.

In the second quarter, the enterprise SaaS market grew 31 percent year-on-year, reaching nearly $15 billion in quarterly revenues. SaaS vendors with the highest overall growth rates are Oracle, Microsoft and Google.

“IaaS and PaaS markets tend to get more attention and are indeed growing more rapidly, but the SaaS market is substantially bigger and will remains so for many years,” John Dinsdale, chief analyst and Research Director at Synergy Research Group said. “Traditional enterprise software vendors like Microsoft, SAP, Oracle and IBM still have a huge base of on-premise software customers and they are all now pushing to aggressively convert those customers to a SaaS-based consumption model. At the same time, born-in-the-cloud software vendors like Workday, Zendesk and ServiceNow continue to light a fire under the market and help to propel enterprise spending on SaaS.”

Synergy said that spending on SaaS remains small compared to on-premise software, which means that the growth in the market is just getting started. It estimates that the SaaS market will double in size over the next three years, with growth across segments and geographic regions.

Synergy notes that the enterprise SaaS market is quite fragmented, with different vendors leading each of the main market segments.

According to a report earlier this year by IDC, SaaS will remain the dominant cloud computing type, capturing nearly two-thirds of cloud spending in 2017, and growing to 60 percent in 2020.

As Talkin’ Cloud has reported, SaaS represents an incredible opportunity for channel partners. Forthcoming research by CompTIA indicates that of the nearly three-quarters of the channel that has built a SaaS portfolio of services today, roughly one-quarter are newcomers to the channel.