There’s no denying the Software as a Service (SaaS) market represents a viable business opportunity for managed services providers (MSPs) and value-added resellers (VARs). However, if you had to pick a downside for your business, there are probably so many successful companies for you to partner with and so many types of SaaS software that it’s hard to keep up with this segment and determine the best way to capitalize.
Help is available: Numerous analysts closely monitor this growing market and its disruption to legacy software. Consider these eight SaaS statistics that could influence the direction you take your business in 2023.
1. The enterprise SaaS market is expected to grow to $135 billion in 2023.
In addition to growth this year, Statista reports that SaaS revenue will increase at 5.49 percent CAGR from 2023 to 2027 to $167 billion.
2. Top SaaS companies have an average monthly churn rate between 3% and 8%.
The churn rate is an important metric to monitor. For example, if you spend $100 to acquire a new customer who pays you $20 per month, you need that customer to continue to use your software for five months, or you’ve lost money. Remember that a monthly churn rate of 3-8 percent equals an annual churn rate of 32-50 percent. Therefore, doing all you can to keep the rate low can tremendously impact your business.
3. Cloud spending by SMBs was up 38% from 2021 to 2022.
Flexera’s survey of 753 technical and business professionals found that 62 percent of SMB workloads are in or on their way to the cloud.
4. The largest functional software market in the world is customer relationship management (CRM).
SuperOffice reports the CRM market is projected to reach $80 billion in revenue by 2025. Moreover, those who have embraced cloud and mobile technologies have seen a vast improvement in both their employees’ adoption of CRM software and meeting sales quotas. And according to Buyer Zone (now acquired by Business.com), 91% of companies with more than 11 employees now use CRM software.
5. Human capital management (HCM) is the next largest market, estimated to reach $24.64 billion in 2026.
The Human Capital Management Software market was valued at $16.7 billion in 2020 and is expected to reach $24.64 billion by 2026, at a CAGR of 6.7% over the forecast period 2021-2026, per research from Mordor Intelligence.
6. The average business uses 1,935 cloud services; IT departments believe they use 30.
McAfee reports that about 10% of rogue cloud services accessed via a business network are considered high-risk. Gartner predicted that through 2025, 95% of cloud security failures would be the customer’s fault. It also indicated that 90% of organizations that fail to control the public cloud would inappropriately share sensitive data.
7. The Managed Services Market is Booming (12.44% CAGR, 2018-2028)
Mordor Intelligence reports SMBs are the primary driving factors that positively impact the market growth, as more and more of these companies are looking to outsource non-core activities.
These SaaS statistics showing the opportunity for you to sell Software as a Service are only a part of the potential growth for your company. As companies adopt these solutions, they also need help choosing the right solutions from a crowded marketplace, managing them, and securing them. VARs and MSPs providing these services have the opportunity to grow right along with SaaS adoption.