The Hostway Blog

SaaS Trends: Market Growth and the Benefits Behind the Shift

Software as a Service has been around for more than a decade, whether users realize it or not. As company leaders have become increasingly aware of cloud computing and the advantages that hosted infrastructure can offer, SaaS solutions have become more popular. The market has grown considerably over the past few years – and is expected to continue to expand – as more individuals in the corporate space become aware of the range of benefits a hosted SaaS architecture can provide.

ZDNet contributor Charles McLellan noted that, though SaaS is now viewed as a mainstream technology, it wasn't until the launch of some of the widely-utilized systems around 2000 - including Salesforce's flagship customer relationship management system - that the movement began to take hold.

"Software as a Service (SaaS), the best-known branch of cloud computing, is a delivery model in which applications are hosted and managed in a service provider's data center, paid for on a subscription basis and accessed via a browser over an Internet connection," McLellan wrote.

SaaS market by the numbers
As SaaS solutions become commonplace in several industries, the market has felt the effects. IDC research shows that SaaS technologies are projected to constitute a quarter of all new enterprise software purchases by 2016, while PWC estimates that SaaS delivery will make up approximately 14.2 percent of all software spending. Overall, the entire SaaS market is projected to expand at a compound annual growth rate of 21.3 percent over the next two years.

However, because SaaS solutions include such a wide range of systems, it is also valuable to examine these individual sections of the market, which are experiencing varied rates of growth. According to Reportlinker.com, the global CRM SaaS market will expand at a 20.83 CAGR until 2018. During the same time period, the global enterprise resource planning SaaS market will grow by 13.80 percent.

Some of the most significant growth will come during the next year, according to Gartner findings. According to PCWorld, researchers estimated that the SaaS sector will be worth more than $22 billion through 2015. This is a considerable increase from 2012's $14 billion value.

Trumba noted that Bill Gates once called SaaS the "next sea change [that] is upon us," and it seems that others have taken notice of the emerging trend as well and will continue to contribute to its growth.

SaaS advantages: The reason for the change
As companies continue to shift away from application providers and toward hosted SaaS solution vendors, it is interesting to examine the benefits offered by SaaS systems are the main reason for this change.

"Why this shift – some analysts describe it as a 'tectonic shift' – from licensed software that organizations install and maintain on their own computers to web-hosted solutions to which organizations subscribe?" Trumba asked. "The shift is occurring because organizations like yours benefit when vendors offer software as a web-hosted service."

So what are some of the benefits SaaS solutions can offer?

  • Reduced IT costs as a result of the vendor maintaining the system
  • Scalability that allows companies to grow their services to match their needs
  • More time to devote to other mission-critical pursuits as the internal IT team no longer needs to update and maintain software
  • Immediate updates and access to the latest versions of programs - no more waiting for the upgraded software to be released
  • Reliability as the SaaS provider ensures that solutions are never down and always available to users

However, SaaS solution benefits are only as good as the provider offering them. Company leaders should rely on a trusted SaaS vendor like Hostway. We can guarantee that all the advantages SaaS solutions have to offer are always available to you and your organization.