Microsoft has earned itself a reputation for being somewhat late to the party when new technologies burst onto the scene, but thanks to to its monumental resources, it nearly always grabs a piece of the pie for itself if it wants to.

That was the case with cloud services, where many of Microsoft’s offerings came out far later than some of the earliest market entrants. Nonetheless, the Redmond, WA-based firm has already surpassed the competition, according to a new report from Synergy Research Group, which claims it has overtaking Salesforce.com Inc. to become the leader in enterprise Software-as-a-Service (SaaS).

The research shows that Microsoft had a 15 percent share of worldwide SaaS revenues in Q2 of 2016, compared to Salesforce’s 14 percent. In the previous quarter, the two companies were tied with 14 percent each, and before that, Salesforce had always ruled the roost.

The king of collaboration

Salesforce still has the distinction of leading the Customer Relationship Management (CRM) market, but Microsoft has edged it out in collaboration tools. It also comes second in CRM, and third in “other enterprise SaaS products,” according to Synergy Research. Neither company ranked in the top three of the other two segments – namely Enterprise Resource Planning (ERP) and HR/HCM software.

Microsoft is thriving in what is an extremely fast-growing market. The report notes that the worldwide enterprise SaaS market saw 33 percent growth in the last year, surpassing $11 billion in quarterly revenues. The market is on track to be worth between $44 billion and $48 billion by the end of this year. The report cites ERP as the fastest-growing segment within the overall SaaS market, showing 49 percent growth year-over-year, compared to 37 percent growth in the collaboration segment.

Microsoft’s top collaboration tools include its SharePoint and Office 365 products, the report notes.

One of the more surprising findings of Synergy Research’s report is that of the top SaaS providers listed, Oracle is the fastest-growing of them all, beating out Microsoft, Salesforce, SAP SE, Adobe Inc., Workday, IBM and others. Synergy Research said Oracle achieved the highest growth rate in Q2 of 2016, but it didn’t cite any figures.

Explosive growth ahead

Looking ahead, Synergy Research notes that although enterprise SaaS is already a mature market compared to other cloud segments like Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS), there’s still lots of room for expansion. Indeed, Synergy Research says the SaaS market will triple in size in the next five years, with growth across all segments and in all areas of the world.

“In SaaS, a big battle is playing out between the traditional broad-based software vendors and companies that are focused on a specific application area or industry sector, many of which are entirely cloud-based,” said Synergy Research’s Chief Analyst and Research Director John Dinsdale. “It might be tempting to assume that the latter camp are leading the charge, but in fact the traditional software vendors are growing their SaaS revenues more rapidly, helped by their huge base of on-premise software customers that can be aggressively targeted for conversion to a SaaS consumption model.”

Photo Credit: vitalspringtech via Compfight cc