8 SaaS Statistics That Smart VARs and MSPs Know

These facts confirm Software as a Service market growth — and the need for your SaaS consulting and support expertise.

Cloud-Based Apps

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). If you had to pick a downside for your business, it’s probable that there are 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 keep a close watch on this growing market and its disruption to legacy software. Consider these eight SaaS statistics that could influence the direction you take your business in 2020.

1. Enterprise SaaS spending has grown to $100 billion per year.

Synergy Research Group reports the SaaS market is growing at nearly 30% per year. Synergy states that although the SaaS market is mature, it is only about 20% of total enterprise software spending, which implies that SaaS spending will continue to increase in the future.

2. Top SaaS companies have a churn rate between 5% and 7%.

SaaSX says this is equivalent to a loss of $1 out of every $200 per month. SaaSX also points out that the very best SaaS businesses have a negative churn rate and a revenue retention rate of more than 100 percent.

3. SaaS adoption has grown from less than 60% of microbusinesses and 62% of SMBs in 2015 to 77% for microbusinesses and 80% for SMBs.

Techaisle points out that SaaS statistic shows that, within four years, 47% of small businesses that weren’t using at least one SaaS solution adopted the technology. 

4. 68% of organizations are using mostly SaaS applications, and 23% use only SaaS applications.

In research for its 2019 Compliance SaaS Trends Report, Blissfully states that SaaS has created a new issue for your customers and prospects to deal with — balancing employee empowerment with security and control — and 94% of IT professionals say it’s their top concern. 

5. The largest functional software market in the world is customer relationship management (CRM).

SuperOffice reports the CRM market is projected to reach $80 billion by 2025, and the adoption of CRM software on mobile devices increased in 2019. 

6. The next largest market is human capital management (HCM), estimated to reach $10.6 billion in 2020.

Apps Run the World projects enterprise resource management (ERP)-service and operations management and collaboration software to each reach $6 billion in 2020, followed by analytics and BI ($5.3 billion), product lifecycle management/engineering ($5.2 billion), procurement ($4.3 billion) and content management ($4.1 billion).

7. 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 by 2020, 95% of cloud security failures would be the customer’s fault.

8. MSP margins decreased by 17% in 2018.

Jay McBain, Principal Analyst, Channel Partnership and Alliances for Forrester, says this takes many MSPs down to a breakeven point. However, firms that can provide SaaS integrations and other services could make 40% to 75% margin.

Theses SaaS statistics show the opportunity for you sell Software as a Service is only a part of potential growth for your company. As companies adopt these solutions, they are also finding they need help to choose the right solutions from a crowded marketplace, manage them, and secure them. VARs and MSPs providing these services have the opportunity to grow right along with SaaS adoption.

The former owner of a software development company and having more than a decade of experience writing for B2B IT solution providers, Mike is co-founder of XaaS Journal and DevPro Journal.