Report: Microsoft remains clear leader in Software as a Service market

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The enterprise Software-as-a-Service market grew by 32 percent year-over-year to almost $13 billion in quarterly revenues, according to a new report from Synergy Research Group.

Microsoft Corp. remains the clear leader in overall SaaS revenues, having overtaken Salesforce.com Inc. last year. Much of Microsoft’s growth in the sector is attributed to increased adoption of its Office 365 suite over the past two years, Synergy said.

Other leading SaaS vendors with high growth rates include Oracle Corp. and Google Inc., while SAP SE, Automatic Data Processing LLP, IBM Corp., Workday Inc., Intuit Inc. and Cisco Systems Inc. were also named as leaders in the report.

The fourth-quarter 2016 market data also shows that Enterprise Resource Planning and collaboration were the two highest-growth segments. Synergy said in its report the enterprise SaaS market has matured considerably compared with other cloud markets like Infrastructure-as-a-Service and Platform-as-a-Service, and therefore has lower growth rates.

Still, Synergy reckons the SaaS market will double in size over the next three years, forecasting strong growth across all geographic regions and segments. “There are a variety of factors driving the SaaS market that will guarantee substantial growth for many years to come,” said John Dinsdale, chief analyst and research director at Synergy.

Dinsdale was referring mainly to the push by legacy companies like IBM, Oracle and SAP to convert their huge on-premises customer bases into SaaS subscribers. He also noted that companies such as Workday and Zendesk Inc. are targeting the enterprise market aggressively, while Google and Microsoft are both keen to grow their customer bases in the collaboration market.

Synergy, which is based in Reno, Nevada, offers quarterly market sizing and segmentation data on cloud and related markets, including company revenues by segment and by region.

Image: Synergy