Software as a Service (SaaS) Market
Software as a Service (SaaS) Market Size, Share & Industry Analysis, By Deployment Model (Public Cloud, Private Cloud, Hybrid Cloud), By Application (Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Human Resource Management (HRM), Supply Chain Management (SCM), Others), By Industry Vertical (BFSI, Healthcare, IT & Telecom, Retail, Manufacturing, Others), By Region (North America, Europe, Asia-Pacific, Latin America, Middle East & Africa) - Share, Size, Outlook, and Opportunity Analysis, 2024-2031.
Market Overview:
The global Software as a Service (SaaS) Market is projected to grow at a CAGR of 18.5% from 2024 to 2031. The market value is expected to increase from USD XX billion in 2024 to USD YY billion by 2031. North America dominates the market, driven by early technology adoption and the presence of major SaaS providers. Key metrics include increasing cloud adoption, rising demand for scalable and flexible software solutions, and growing focus on digital transformation across industries.
Software as a Service (SaaS) Market Dynamics:
Market Trend: Integration of artificial intelligence and machine learning capabilities in SaaS solutions
The SaaS market is experiencing a major trend of integrating artificial intelligence (AI) and machine learning (ML) capabilities into existing products. SaaS firms are embracing AI and ML to improve their products, including predictive analytics, intelligent automation, and personalised user experiences. This tendency is especially noticeable in customer relationship management (CRM) and corporate resource planning (ERP) SaaS systems. For example, Salesforce's Einstein AI engine, which is integrated into its CRM package, processes over 80 billion AI predictions every day, assisting organisations in making data-driven decisions. The AI in SaaS market is predicted to grow at a 35.2% CAGR between 2021 and 2026, demonstrating that these technologies are being rapidly used inside SaaS products.
Market Driver: Increasing adoption of cloud-based solutions and digital transformation initiatives across industries
The SaaS market is expanding rapidly, owing to increased acceptance of cloud-based solutions and significant digital transformation initiatives across industries. Organisations are progressively shifting from on-premises software to cloud-based SaaS solutions in order to decrease IT infrastructure costs, increase scalability, and improve business agility. According to major consulting firms, the worldwide public cloud services industry, of which SaaS is a big component, is expected to expand 23.1% in 2021 to $YY billion. The COVID-19 epidemic has hastened this trend, with firms quickly adopting SaaS solutions to allow for remote work and ensure business continuity. For example, Microsoft observed a 775% rise in cloud service usage in areas with social distancing or shelter-in-place orders.
Market Restraint: Data security and privacy concerns in cloud-based software solutions
Despite the increasing usage of SaaS solutions, data security and privacy concerns continue to pose substantial barriers to industry expansion. As more organisations store sensitive data on the cloud, concerns about data breaches, unauthorised access, and compliance with data protection rules such as GDPR and CCPA have grown. According to an IDC report, 79% of firms have had at least one cloud data breach in the last 18 months. These security issues can delay SaaS adoption, especially in highly regulated industries like healthcare and finance. SaaS companies are investing extensively in improving their security procedures, yet the impression of risk remains a key barrier for some prospective consumers.
Segment Overview:
Customer Relationship Management (CRM) segment leads the SaaS market, driven by increasing focus on customer experience and sales optimization
The Customer Relationship Management (CRM) segment has emerged as the leading force in the SaaS market, indicating the growing importance of customer experience and sales optimisation in all industries. This category is likely to maintain its leading position during the forecast period, owing to the growing requirement for organisations to manage customer contacts, analyse customer data, and optimise sales processes.
The global CRM software market, which is largely cloud-based, is expected to reach $YY billion by 2031, rising at a CAGR of 12.1% between 2024 and 2031. This rise is being driven by an increasing need for solutions that can provide a 360-degree view of clients and enable personalised marketing campaigns.
Major CRM SaaS providers are constantly innovating to maintain their market position. Salesforce, the industry leader in CRM SaaS, reported a 24% year-over-year revenue increase in fiscal year 2021, at $21.25 billion. The company's success is largely due to its ongoing innovation and extension of its CRM platform, which now includes AI-driven insights, marketing automation, and customer support features.
Furthermore, the incorporation of advanced technologies such as AI and machine learning into CRM SaaS solutions is accelerating adoption across multiple industries. These technologies enable predictive analytics, automated lead scoring, and intelligent customer segmentation, hence increasing the value proposition of CRM SaaS solutions for organisations of all sizes.
Regional Outlook:
North America leads the global SaaS market, fueled by high cloud adoption rates and presence of major technology companies
North America dominates the worldwide SaaS industry, with the United States playing the key role in this supremacy. This dominant position is due to the region's high cloud adoption rates, the presence of significant SaaS providers, and a strong culture of innovation in the technology sector.
According to recent industry data, the North American SaaS market is predicted to increase at a CAGR of 17.5% between 2024 and 2031. This substantial development is being fuelled in part by significant digital transformation projects across numerous industries, which have been expedited by the COVID-19 pandemic. According to a McKinsey poll, the pandemic advanced North American corporations' digitisation of customer and supply-chain interactions by three to four years.
Salesforce, Microsoft, Oracle, and Adobe are among the world's leading SaaS companies, with several headquartered in the United States. These firms continue to push innovation in the SaaS industry, resulting in significant market growth. For example, Microsoft's commercial cloud revenue, which includes Office 365 and Azure, increased 34% year on year to $69 billion in fiscal year 2021.
In Canada, the SaaS market is also expanding rapidly, owing to increased usage among small and medium-sized organisations. The Canadian government's efforts to promote cloud use in the public sector are accelerating market growth in the region.
Competitive Intelligence:
The worldwide SaaS market is highly competitive, with a mix of major, established software corporations and new startups. Key players are always spending in R&D to improve their offers and gain market share.
Market leaders are prioritising strategic acquisitions to diversify their product portfolios and enter new market areas. For example, Salesforce's $27.7 billion acquisition of Slack in 2021 aims to improve its collaboration skills and compete more effectively in the workplace communication arena.
In terms of market share, the top five firms account for over half of the global SaaS industry. These organisations have a strong global presence and provide a diverse set of SaaS products across multiple industries. However, the market sees a steady influx of innovative entrepreneurs, particularly in specialist categories, which drives rivalry and innovation.
The COVID-19 epidemic has boosted SaaS adoption across industries, which benefits numerous market participants. Companies that provide solutions for remote work, digital collaboration, and business continuity have experienced tremendous growth during this time.
Analyst Opinion:
The SaaS market is expected to develop significantly in the next years, owing to ongoing digital transformation projects, increased cloud use, and a demand for flexible, scalable software solutions. The transition to vertical-specific SaaS solutions, as well as the integration of sophisticated technologies such as AI, ML, and blockchain, present substantial prospects for market players.
One growing trend to keep an eye on is the growth of "micro-SaaS" solutions, which are highly specialised, niche software packages that cater to specific business needs. This movement has the potential to undermine the market domination of huge, all-in-one SaaS systems.
Furthermore, the rising emphasis on data privacy and security is expected to spur innovation in safe SaaS systems and compliance solutions. Companies that can effectively handle these concerns while providing unique features are likely to acquire a competitive advantage in the rapidly changing SaaS landscape.
Major Players:
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Salesforce.com, Inc.
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Microsoft Corporation
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Oracle Corporation
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SAP SE
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Google LLC
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Adobe Inc.
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Amazon Web Services, Inc.
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IBM Corporation
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Workday, Inc.
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Zendesk, Inc.
Key Developments:
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Salesforce announced an AI-powered assistant that is integrated throughout all of its CRM applications in August 2023, increasing user productivity and data-driven decision making.
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May 2023: Microsoft announced major updates to its Microsoft 365 suite, including sophisticated AI capabilities in Word, Excel, and PowerPoint.
1. INTRODUCTION
1.1. Market Definitions & Study Assumptions
1.2. Market Research Scope & Segment
1.3. Research Methodology
2. EXECUTIVE SUMMARY
2.1. Market Overview & Insights
2.2. Segment Outlook
2.3. Region Outlook
3. COMPETITIVE INTELLIGENCE
3.1. Companies Financial Position
3.2. Company Benchmarking -- Key Players
3.3. Market Share Analysis -- Key Companies
3.4. Recent Companies Key Activities
3.5. Pricing Analysis
3.6. SWOT Analysis
4. COMPANY PROFILES (Key Companies list by Country) (Premium)
5. COMPANY PROFILES
5.1. Salesforce.com, Inc.
5.2. Microsoft Corporation
5.3. Oracle Corporation
5.4. SAP SE
5.5. Google LLC
5.6. Adobe Inc.
5.7. Amazon Web Services, Inc.
5.8. IBM Corporation
5.9. Workday, Inc.
5.10. Zendesk, Inc. (*LIST NOT EXHAUSTIVE)
6. MARKET DYNAMICS
6.1. Market Trends
6.1.1. Integration of artificial intelligence and machine learning capabilities in SaaS solutions
6.1.2. Rise of vertical-specific SaaS solutions
6.1.3. Emergence of micro-SaaS offerings
6.2. Market Drivers
6.2.1. Increasing adoption of cloud-based solutions and digital transformation initiatives across industries
6.2.2. Growing demand for scalable and flexible software solutions
6.2.3. Rising focus on remote work and digital collaboration tools
6.3. Market Restraints
6.3.1. Data security and privacy concerns in cloud-based software solutions
6.3.2. Integration and interoperability challenges with existing systems
6.4. Market Opportunities
6.5. Porter's Five Forces Analysis
6.5.1. Threat of New Entrants
6.5.2. Bargaining Power of Buyers/Consumers
6.5.3. Bargaining Power of Suppliers
6.5.4. Threat of Substitute Products
6.5.5. Intensity of Competitive Rivalry
6.6. Supply Chain Analysis
6.7. Value Chain Analysis
6.8. Trade Analysis
6.9. Pricing Analysis
6.10. Regulatory Analysis
6.11. Patent Analysis
6.12. SWOT Analysis
6.13. PESTLE Analysis
7. BY DEPLOYMENT MODEL (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
7.1. Public Cloud
7.2. Private Cloud
7.3. Hybrid Cloud
8. BY APPLICATION (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
8.1. Customer Relationship Management (CRM)
8.2. Enterprise Resource Planning (ERP)
8.3. Human Resource Management (HRM)
8.4. Supply Chain Management (SCM)
8.5. Others
8.5.1. Collaboration and Productivity Tools
8.5.2. Business Intelligence and Analytics
8.5.3. Content Management Systems
9. BY INDUSTRY VERTICAL (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
9.1. BFSI
9.2. Healthcare
9.3. IT & Telecom
9.4. Retail
9.5. Manufacturing
9.6. Others
9.6.1. Education
9.6.2. Government
9.6.3. Media and Entertainment
10. REGION (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
10.1. North America
10.1.1. United States
10.1.2. Canada
10.1.3. Mexico
10.2. South America
10.2.1. Brazil
10.2.2. Argentina
10.2.3. Rest of South America
10.3. Europe
10.3.1. Germany
10.3.2. United Kingdom
10.3.3. France
10.3.4. Italy
10.3.5. Spain
10.3.6. Russia
10.3.7. Rest of Europe
10.4. Asia-Pacific
10.4.1. China
10.4.2. Japan
10.4.3. India
10.4.4. Australia
10.4.5. South Korea
10.4.6. Rest of Asia-Pacific
10.5. Middle-East
10.5.1. UAE
10.5.2. Saudi Arabia
10.5.3. Turkey
10.5.4. Rest of Middle East
10.6. Africa
10.6.1. South Africa
10.6.2. Egypt
10.6.3. Rest of Africa
*NOTE: All the regions mentioned in the scope will be provided with (MARKET SIZE/VALUE (US$ Mn), SHARE (%), MARKET FORECAST (%), YOY GROWTH (%)-- 2020-2031)
Software as a Service (SaaS) Market Segmentation:
By Deployment Model:
- Public Cloud
- Private Cloud
- Hybrid Cloud
By Application:
- Customer Relationship Management (CRM)
- Enterprise Resource Planning (ERP)
- Human Resource Management (HRM)
- Supply Chain Management (SCM)
- Others
By Industry Vertical:
- BFSI
- Healthcare IT & Telecom
- Retail
- Manufacturing
- Others
By Region:
- North America
- Europe
- Asia-Pacific
- Latin America
- Middle East & Africa
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