SaaS spending hits $100bn annual run rate, Microsoft leads

San Francisco: Led by Microsoft and Salesforce, the enterprise Software-as-a-Service (SaaS) revenue passed the $100 billion run rate this quarter, a new report has said, adding that the SaaS market continues to grow at almost 30 percent per year.

According to Synergy Research that monitors Cloud market share, the enterprise SaaS market generated well over $23 billion of revenue for software vendors in Q1 and will hit a $100 billion annual run rate in the current quarter.

Microsoft reported $10.1 billion in Productivity and Business Processes revenue with a global market share of 17 percent.

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Salesforce was second with $3.74 billion in revenue and garnering 12 percent market share. Adobe came in third with 10 percent market share and $2.74 billion in revenue.

SAP and Oracle came fourth and fifth, respectively.

“The SaaS vendor landscape essentially breaks out into three camps — traditional enterprise software vendors, relatively newborn-in-the-cloud players and large IT vendors that are looking to expand more into software markets,” said John Dinsdale, a chief analyst at Synergy Research Group.

In the first camp are companies like Microsoft, SAP, Oracle, and IBM that have a huge base of on-premise software customers that they can convert to a SaaS-based consumption model.

Born-in-the-cloud vendors include Workday, Zendesk, ServiceNow, Atlassian, and Splunk, who tend to have much higher growth rates.

“Meanwhile Google and Cisco are making an impact in the SaaS market, via Google’s G Suite and Cisco’s collaboration apps and multiple software vendor acquisitions,” said Dinsdale.

The top five SaaS vendors now account for just over half of the total market.

The next 10 vendors account for another 26 percent of the market. Among these 10, the vendors with the highest growth rates are Google, ServiceNow, and Workday.

While Microsoft’s growth rate is diminishing due to the massive scale it has achieved, over the last four quarters, it has averaged 34 percent, comfortably higher than the overall market growth rate.

“While SaaS growth rate isn’t as high as IaaS and PaaS, the SaaS market is substantially bigger and it will remain so until 2023,” said the report.

[source_without_link]IANS[/source_without_link]

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