Software as a Service Market Trends

Software as a Service (SaaS) Market Overview

The global software as a service market is estimated to reach a valuation of USD 1267.5 billion by the year 2032, at a CAGR of 18.3% during the forecast period from 2024 to 2032. SaaS, or Software as a Service, is a cloud-based service that delivers software applications over the Internet. The SaaS market's growth is primarily driven by the increasing adoption of public cloud services in large and small-scale companies.

The increasing adoption of Software as a Service (SaaS) by businesses, as a result of the expensive nature of on-premises software deployment, is expected to drive the growth of the market. 

Figure 1: Software as a Service Market Size, 2024-2032 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Software as a Service Market Trends Insights

The new-age trend of integrating artificial intelligence and machine learning technologies with SaaS solutions is making the software as a service market take a giant leap. 

SaaS solutions have witnessed several key transformations in their technologies, such as Machine Learning (ML) and Artificial Intelligence (AI), which have been included to enhance operational efficiency and intelligence across several industrial domains. Enterprises across many sectors utilize autonomous innovations to improve their services and products and optimize content through data-driven research to gain insights into users' requirements. Machine learning enables these solutions to enhance operational efficiency and intelligence. Therefore, as AI-based solutions become increasingly important, organizations will require more effective control over software training. 

The adoption of artificial intelligence and machine learning is expected to significantly transform this business by enhancing the fundamental characteristics of various software solutions. By integrating software as a service solution along with AI and ML capabilities, it is feasible to customize and automate solutions, improve security, and enhance human potential. Furthermore, in September 2022, Nokia announced its intention to enhance its SaaS solution portfolio by providing more appealing options to Communication Service Providers (CSPs) and companies. The new portfolio aims to streamline the storage and utilization of data, minimize the time required for data management, and enhance the efficiency of repeated processes. 

In addition, Saas is a dynamic and adaptable service that is part of a range of cloud computing technologies. It presents numerous problems and opportunities for cloud service providers, users, and varied industrial sectors. The pivotal emerging aspects of Software as a Service (SaaS) will persistently develop and delineate the future of cloud technologies, encompassing its innovation, effectiveness, and commercial worth for companies worldwide. Therefore, the aforementioned variables are anticipated to significantly influence the market throughout the forecast period. 

Software as a Service Market Segment Insights 

The global software as a service market is primarily segmented based on deployment, industry, and end-use. 

Based on deployment, the Software as a Service market is further sub-segmented into community cloud, public cloud, hybrid cloud, and private cloud. Out of which, the private cloud sub-segmentation owes the major market share. Deploying SaaS applications at the network's edge, combined with a private cloud infrastructure, enhances data control, security, and performance while reducing latency. This approach ensures compliance with regulations and lowers the risk of data breaches. The integration of edge computing and private cloud forms a robust platform for delivering SaaS applications tailored to modern business needs. Furthermore, followed by the private cloud segment, the hybrid cloud segment is poised for significant growth, driven by increasing demand for industry-specific SaaS applications in healthcare, finance, and education. Several key organizations seek customized solutions, such as hybrid cloud, to meet unique industry requirements and regulatory compliance, as demonstrated by recent agreements with Accenture, Kubota, Chubu Electric Power Group, and Infosys.

Based on end-use, the Software as a Service market is further divided into SMEs and large enterprises. Out of these, the large enterprises segment dominates the global market share. Large enterprises benefit from SaaS solutions by gaining cost-effectiveness, scalability, and flexibility. One of the evolving trends in the said market is the adoption of multi-cloud and hybrid-cloud strategies together due to the growing need to manage complex distributed applications across geographies and cloud providers. Apart from this, small and medium enterprises (SMEs) are experiencing significant growth by embracing the on-demand consumption model of SaaS. Cost-effectiveness, accessibility, and scalability make SaaS attractive for SMEs, enabling them to compete effectively, enhance productivity, and stimulate growth.

Based on Industry, the global Software as a Service market is further segmented into retail, IT & Telecommunication, Entertainment, BFSI, Healthcare and Manufacturing. Out of these, BFSI segmentation dominates the global market share. The reason the BFSI segment dominates the market share is the major transformations in the industry that are propelled by emerging technologies and digital platforms disrupting conventional models. Apart from this, cloud-based core banking solutions are gaining popularity for their flexibility and scalability, surpassing on-premises alternatives. These solutions enable financial institutions to swiftly adapt to market changes, scale operations as needed and cut costs. For instance, in June 2022, Aqua Security Software Ltd. launched cloud-native security SaaS in Singapore, serving the wider Asia Pacific and Japan region, which offered government, banking, and regulated sectors comprehensive compliance, cloud-native security, and risk management for efficient data governance.

Software as a Service Market Region Insights

The global software as a service market is primarily studied across four major regions, namely, North America, Europe, Asia-Pacific and the Rest of the World. Out of which, the North American region dominates the global market share. 

The North American region dominates the global software as a service market owing to the presence of major players in the region and the early adoption of technologies like AI, IoT, robots, and the cloud. The region's adoption of software as a service application is influenced by the presence of major SaaS platform suppliers, like IBM Corporation, Oracle Corporation, and Microsoft Corporation. Apart from this, the North American market is being revolutionized by the integration of Artificial Intelligence (AI) and Machine Learning (ML), leading to significant transformations in client services. The region is projected to expand further as a result of increasing developments in the market. 

Following North America, the European region also owes a substantial market share due to the advancements in SaaS solutions by the major key players in the region. Along with Europe, the Asia-Pacific region is predicted to exhibit exponential growth rate during the forecast period, owing to the demand for increased resilience and agility across businesses that are likely to adopt cloud solutions. 

Software as a Service Market Key Players & Competitive Insights

Key competitors in the global market are prioritizing the expansion of their market share and global reach by implementing key strategies, including merger and acquisition, partnership deals, collaboration deals, joint ventures, business expansion deals, etc. These organizations are procuring small and local firms in order to augment their company presence and extend their consumer base. 

Software as a Service Key Companies Insights 

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  Salesforce (U.S.)

  
  


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  Zuora (U.S.)

  
  


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  LinkedIn (U.S.)

  
  


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  Microsoft Inc. (U.S.)

  
  


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  Concur Technologies (U.S.)

  
  


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  Medidata Solutions (U.S.)

  
  


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  Workday, Inc. (U.S.)

  
  


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  Oracle Corporation (U.S.)

  
  


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  IBM Corporation (U.S)

  
  


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  NetSuite Inc. (U.S.)

  
  


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  ServiceNow, Inc. (U.S.)

  
  


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  Google Inc. (U.S.)

  
  

Recent Developments

In April 2023, Taclia, which is a Software-as-a-service startup, went ahead and launched a dedicated solution that focuses on the digitization of daily management processes. The company was able to acquire a whopping 6.7 million dollars in funding which would allow them to enhance the development of their solution.

In January of 2023, Revionics, together with Google Cloud, designed a dynamic pricing application powered by BigQuery, Looker and other tools to make use of automation, scale, and speed.

In December 2022, AppOmni announced an alliance with Veeva Systems whose goal was to extend the security of Veeva Vault and Veeva CRM. This provided life sciences clients the ability to use AppOmni’s threat detection and configuration management solution. Joint customers can implement new AppOmni’s Veeva integration to protect sensitive data and comply with the standards of good practice.

In November 2022, the ModelScope Platform and New Solutions were Launched by Alibaba Cloud with the ambition of lowering the threshold to business innovation materialization.

In November 2022, the three sales categories started to support Independent Software Vendors and SaaS businesses to improve sales opportunities, Microsoft Marketplace hosted its inaugural Summit with Azure. It is anticipated that this will enable ISVs to develop fully integrated security using technologies from the Microsoft Cloud, such as Microsoft Teams, Azure, Power Platform, and Dynamics 365.

In June 2022, Aqua Security Software Ltd., a cloud-native security firm, announced the new availability of cloud-native security software as a Service (SaaS) that would be based in Singapore with coverage to the wider Asia Pacific and Japan (APJ). With the provision of this service, government, banking, financial and other regulated industries in the region are able to harness the service for regulatory compliance, managed cloud assurance and risk assessment and management that meets their data authorities as well as management requirements.

Software as a Service Market Segmentation

Software as a Service By Deployment

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  Community cloud

  
  


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  Public cloud

  
  


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  Hybrid cloud

  
  


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  Private cloud.

  
  

Software as a Service By End-user

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  SMEs 

  
  


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  Large enterprises.

  
  

Software as a Service By Industry

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  Retail IT & telecommunication

  
  


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  Entertainment

  
  


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  Retail

  
  


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  BFSI

  
  


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  Healthcare

  
  


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  Manufacturing