SaaS Market Nears the $15 Billion Per Quarter Milestone

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Software-as-a-service (SaaS) companies generated nearly $15 billion in the second quarter (Q2) of 2017, an annual increase of 31 percent, according to the latest report released today by Synergy Research Group.

Microsoft continues to lead the market, having surpassed cloud customer relationship management (CRM) giant Salesforce last year. A mammoth acquisition later, and the Redmond, Wash. software maker and cloud provider is pulling ahead at a brisk pace.

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“Helped by the LinkedIn acquisition, Microsoft further distanced itself from the chasing pack of SaaS providers. Long-time market leader Salesforce was overtaken by Microsoft a year ago but remains the number two player,” said John Dinsdale, chief analyst and research director at Synergy Research Group.

saas market

“These two are followed by Adobe, Oracle and SAP,” continued Dinsdale. “The fastest growing major SaaS providers are Oracle, Microsoft and Google.”

The collaboration segment of the market is growing the quickest, he added. And Microsoft is in a good position to capitalize on this trend.

In recent years, the company has been sprinkling collaboration capabilities onto its cloud-enabled productivity software suite, Office 365. In March, Microsoft released Teams, the company’s answer to Slack, a popular group chat collaboration platform.

Naturally, Microsoft Teams is tightly integrated with the rest of the Office 365 ecosystem, allowing users to quickly pull Office-based content and communications into their chat sessions.

“The Office 365 applications and services that people use every day—including Word, Excel, PowerPoint, OneNote, SharePoint and Power BI—are built into Microsoft Teams, giving people the information and tools they need,” announced Kirk Koenigsbauer, in a blog post announcing the general availability of Microsoft Teams earlier this year. “We’ve recently added support for open, public teams within an organization. We’ve also enhanced the meeting experience by adding scheduling capabilities, integrating free/busy calendar availability for team members, adding recurrence, and making it easier to transition from chat to high-quality voice and video.”

The market remains highly fragmented but it doesn’t appear to matter much, at least in terms of overall growth. Synergy expects SaaS providers to double their revenues within the next three years, Dinsdale said, which spells good news for the market as a whole.

Microsoft, Salesforce and the aforementioned companies aside, other leading SaaS providers include ADP, Cisco, IBM, Intuit, ServiceNow and Workday. The latter two companies, along with other “born-in-the-cloud” vendors are credited with keeping the industry on its toes and helping spur enterprise demand for SaaS solutions by Synergy.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.