Software as a Service (SaaS) refers to the type of public cloud service that delivers software applications over the internet on a subscription basis. Users can access and use the software through web browsers without having to install or maintain it locally. SaaS eliminates the need for purchasing, installing, and updating software, thus offering convenience and automatic updates while allowing users to focus on using the software to meet their requirements. The SaaS market includes the companies that provide these types of cloud-based software resources and services to individuals, businesses, and organizations. A typical example of this type of service is Microsoft Office 365, an SaaS suite of applications (e.g., Word, Excel, and PowerPoint) available for purchase by subscription and accessible via a web browser.
The Software as a Service (SaaS) market comprises revenue, revenue change, average spend per employee, and key player market shares as key performance indicators. Only revenues that are generated by primary vendors at the manufacturer price level either directly or through distribution channels (excluding value-added tax) are included, and revenues generated by resellers are excluded. Revenues are generated through both online and offline sales channels and include spending by consumers (B2C), enterprises (B2B) as well as governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed.
Key players of the SaaS market include companies such as Microsoft (Office 365), Salesforce (Customer 360), Oracle (Cloud applications), and IBM (Cloud).
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Enterprise software, such as SAP ERP, Oracle ERP Cloud, Salesforce CRM, and Microsoft Dynamics365
Productivity software, such as Microsoft 365, Google Workspace, and Adobe Creative Cloud
System infrastructure software, such as Microsoft Windows Operating System and Linux Operating System
On-premises software, such as on-premises versions of Microsoft Office, SAP ERP, and Oracle Database
Business-Process-as-a-Service (BPaaS), such as payroll management and accounting solutions via ADP Workforce Now, Intuit QuickBooks Online, Workday, and Oracle NetSuite
Software as a Service (SaaS) is the largest segment of the Public Cloud market, comprising more than half of the total market size. Growth in this segment will continue to slightly slow down in the coming years. SaaS products comprise any available on-premises software and thus offer software solutions that can be used in various industries. For this reason, the market concentration in the SaaS segment is quite low, as many very different products are offered by several companies. Software as a Service is becoming increasingly attractive to companies looking for accessibility and diversity of software solutions. Therefore, the global COVID-19 pandemic will accelerate the adoption of Software as a Service worldwide.
The data encompasses B2B and B2C enterprises. Figures are based on the money spent at manufacturer price level (excluding VAT).
Modeling approach / Market size:
The segment size is determined through a top-down approach. We use financial statements such as annual reports, quarterly earnings, and expert opinions to analyze the markets. To estimate the segment size for each country individually, we use relevant key market indicators and data from country-specific industry associations, such as GDP and level of telecommunications infrastructure.
We use a variety of forecasting techniques, depending on the behavior of the relevant segment. The main drivers are the GDP and the level of digitization.
The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic is considered at a country-specific level.