The State of SaaS in 2022: Growth Trends & Statistics.
In the IT industry, SaaS solutions are the fastest-growing segment. Software-as-a-service (SaaS) models provide subscription-based software via a remote cloud network and are becoming a popular option for many organizations due to their affordability and flexibility.
SaaS spending vs overall IT spending :
Gartner forecasts end-user spending on public cloud services to reach $396 billion in 2021—and grow 21.7% to reach $482 billion in 2022.
Cloud growth: SaaS vs other Cloud Service :
SaaS is arguably the most attractive cloud option. As a result, SaaS industry growth will be consistent throughout these years as more companies adopt SaaS applications for various business functions that extend far beyond the initial SaaS territories of core engineering and sales applications.
Cloud application services (SaaS) :
120,686 (2020) –> 145,509 (2021) –> 171,915 (2022)
SaaS is slowing down, especially compared to other cloud services like platform as a service (PaaS) and infrastructure as a service (IaaS). Both are projected to double in just five years from now.
Largest SaaS companies (per market cap in September 2021; shown in USD Billions):
- Adobe ($ 315.0)
- Salesforce ($ 251.8)
- Shopify ($ 185.4)
- Intuit ($ 154.9)
- Servicenow ($ 127.9)
- Square ( $ 112.9)
- Atlassian ($ 95.0)
- Snowflake ($ 94.3)
- Zoom ($ 89.6)
- Workday ($ 66.3)
SaaS acquisitions in 2021 :
Dropbox acquired document sharing and tracking company Docsend for $165 million. Networking hardware giant Cisco acquired security leader Kenna Security for $5.2 billion. Conversation intelligence company Chorus.ai was acquired by ZoomInfo for $575 million. Panasonic Corporation completed the acquisition of Blue Yonder, a leading provider of end-to-end digital fulfillment platforms. Since the workplace landscape has recently shifted, industry leaders have continued to turn to SaaS solutions.
Recent SaaS IPOs :
SaaS solutions have continued to gain popularity among industry leaders, despite the recent changes in workplaces. Multiplying the business created a clear path to IPO for several SaaS companies in 2021. In fact, the number of businesses specializing in SaaS that have IPOed in 2021 has increased 125% compared to the same period in 2020.
Significant SaaS IPO news of the last year:
Couchbase – On July 22, Couchbase’s shares soared 39 percent to $33.25 a share, valuing the company at more than $1 billion on its first day on the market
SentinelOne – Cybersecurity company SentinelOne closed at $42.50 per share on June 30 in its initial public offering, valuing the firm at $10 billion. The company specializes in endpoint security using machine learning (ML) to combat cyber-attacks.
Confluent – On June 23, Confluent began trading at $36 per share, bringing its value to $9 billion. The company offers a platform for streaming data based on the popular open-source Kafka platform.
Sprinklr – Some of the world’s largest brands use Sprinklr’s media management, advertising, and content marketing tools. Its IPO price in June was $16 per share, valuing the company at $4 billion.
SaaS adoption & workforce size :
In recent years, SaaS products have experienced rapid growth in users and types. SMBs and startups initially viewed SaaS as an ideal solution for agility, and SaaS is now being adopted by businesses of all sizes and shapes.
Recent research finds that:
The SaaS market is currently growing by 18% a year. In 2021, 99% of organizations will use one or more SaaS solutions. Over 78% of small businesses have already invested in SaaS options. In the healthcare industry, SaaS adoption is growing at 20% per year. According to 70% of CIOs, agility and scalability are two of the most important reasons for using SaaS applications.
Why is SaaS so popular?
Starting around 2012, the average number of competitors for SaaS firms was less than three. Each SaaS startup faced competition from nine other firms in the same market segment by the end of 2017. SaaS marketing solutions, for example, increased from 500 to 8,500 products between 2007 and 2017. Additionally, customers are increasingly adopting subscription-based pricing models to satisfy their IT needs despite limited IT budgets, especially for SMBs and startups. Despite their size, established enterprises are not looking down on SaaS either. This trend is not going away anytime soon, based on SaaS growth rates, IPOs, and acquisitions.
SaaS benefits for the customer:
From a customer perspective, SaaS products offer a variety of benefits:
SaaS delivers higher strategic value versus on-premise software deployments.
– The software deployment time has been reduced from weeks to minutes with a SaaS model.
The wealth of enterprise SaaS solutions available gives users diverse resources to address varied demands.
– Organizations are seeing an increase in employee engagement with feature-rich SaaS solutions that improve customer service.
SaaS vendors can also push feature improvements, bug fixes, and security updates on the fly.
– Before these capabilities were made available to end-users through on-premise deployments, they had to pass through several layers of organizational protocols and governance.
It has become easier for software vendors and enterprises to effectively deliver the functionality and features desired by end-users using SaaS technologies, ultimately contributing to the popularity of SaaS solutions over on-premise software solutions.
SaaS Trends in 2022 :
As a whole, software as a service solution won’t go away any time soon. SaaS is being used by small and large businesses alike, and as these options expand, this percentage will only grow.