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 2022.
1. The enterprise SaaS market is expected to increase by nearly $100 billion between 2020 and 2025.
Technavio reports the SaaS market is expected to increase by $99.99 billion from 2020 to 2025, and the market’s growth momentum will accelerate at a CAGR of 11%. Additionally, 52% of the growth will originate from North America.
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. 68% of organizations are using mostly SaaS applications, and 23% use only SaaS applications.
In research for its 2019 Compliance SaaS Trends Report, Blissfully stated 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.
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 revenues by 2025. Those who have embraced cloud and mobile technologies have seen a huge improvement in both the adoption of CRM software by their employees and the meeting of 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. The next largest market is human capital management (HCM), 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 predicted that 90% of organizations that fail to control the public cloud will inappropriately share sensitive data.
7. The Managed Services Market is Booming (12.44% CAGR)
The global managed services market was valued at $161.37 billion in 2021 and is expected to reach $311.32 billion by 2027, a CAGR of 12.44% between 2022 and 2027, per research from Mordor Intelligence. SMBs are the primary driving factors that are positively impacting the market growth, as more and more of these companies are looking to outsource non-core activities.
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 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.