Software as a Service or simply SaaS is a cloud computing, web-based software, or thin-client based distribution model most businesses have come to rely on. Cutting down the costs of on-premise maintenance, it proves to be extremely popular among businesses and continues to rise.
The question is:
Is SaaS worth considering as a preferred business model?
Let’s take a look at the most important SaaS stats to find out!
Fascinating SaaS Statistics (Editor’s Choice)
- 89% of companies use SaaS.
- There are over 50 Publicly Traded SaaS companies.
- There are approximately 10,000 private SaaS companies.
- The SaaS market value is $60.36 billion.
- 59% of companies switched to SaaS by the end of 2019.
- The SaaS market will grow by 27.6% in 2020.
- The SaaS revenue will grow to $110.5 billion in 2020.
- SaaS organizations operate in more than 100 countries.
SaaS Usage Statistics
1. SaaS-powered companies with 200–500 employees used approximately 123 SaaS apps in 2019.
2017 saw a 33% increase in SaaS application use, which continues to rise steadily over the years. Smaller companies with up to 50 employees use 40 apps. Larger enterprises with 1000 employees or more are reported to use up to 203. Some of the most widely recognized SaaS apps include WorkDay, Zendesk, Namely, and Slack.
2. An individual employee used an average of eight SaaS apps in 2019.
According to the latest SaaS usage Statistics, an individual employee in 2019 used eight SaaS apps on average. As companies continue to increasingly adopt SaaS apps, the average continues to reach new heights. Seven of these apps are most likely to be meant for project or task management, while an average of six is used for file sharing and backup.
3. As of 2017, 38% of companies were running almost exclusively on SaaS.
It is another rising trend, which allows companies to cut their costs while still being able to maintain employee satisfaction. SaaS adoption rates are faster than ever and are expected to reach the 78% mark this year.
4. 89% of companies use SaaS.
Software as a Service trends in 2019 show us that this is, by far, the most popular and most common cloud service model among companies. Although IaaS and PaaS are gaining ground, SaaS still dominates the IT environment. 48% of companies invest in SaaS, 30% invest in IaaS, and 21% invest in PaaS.
5. SaaS-powered workplaces improve employee satisfaction by 31%.
SaaS benefits extend beyond reducing the costs of on-premise maintenance and upkeep. It allows employees to work more efficiently. Workplaces saw a 48.6% reduction in email, 30% fewer scheduled meetings, and a 31% increase in customer satisfaction.
State of SaaS Market
6. The SaaS market value was $60.36 billion in 2019.
The IaaS market worth is 50% larger than that of SaaS. While IaaS holds the highest market value, SaaS has an increasing growth rate and is considered a mature market.
7. SaaS hit a $100 billion annual run rate by the end of 2019, SaaS statistics reveal.
SaaS is growing by approximately 30% every year. It is estimated to reach $113.1 billion by 2021 if the current market growth trends persist. If true, this will be a 53.33% increase compared to the market worth SaaS had in 2017.
8. SaaS Market worth will increase to $185 billion by 2024.
(Source: PR Newswire)
As more companies adopt SaaS, the annual growth rate will snowball and bring SaaS to new heights. The SaaS CAGR is expected to increase from the current 9% to 22.4% in 2024.
9. There are over 50 publicly traded SaaS companies.
(Source: The Software Report)
These companies all represent $225 billion in aggregate market capitalization. The median revenue growth rate is 17%. The majority of these companies generate free cash flow.
10. There are approximately 10,000 private SaaS companies.
(Source: The Software Report)
A large number of these companies generate up to $3 million in annual revenue. In contrast, there were only 950 private SaaS companies in 2017. In 2018, 63% of all private SaaS companies were in the US.
11. Google was the top SaaS company in 2019.
According to the latest SaaS stats, Google was the strongest, fastest-growing SaaS company in 2019. With a whopping total of 137 cloud-based products that offer internet-related services, Google is ranked 92 in market presence and 94 in satisfaction, giving it an overall score of 93. Coming in second is Adobe, followed by Slack in third.
12. Oracle was the top SaaS provider for businesses in 2019.
Currently serving 400,000 customers and 100 of the Fortune 100 companies as well as 300,000 mid-sized companies, Oracle is the biggest SaaS business provider, with engineered systems meant to enhance the performance of many public and retail sectors.
13. Salesforce is the largest Public SaaS Company.
(Source: Mike Sonders)
Founded in 1999, Salesforce today is listed on the stock exchange. Its market cap was a mind-blowing $125.41 billion as of February 2019. It gets approximately 78,700,000 of traffic on a monthly basis. 51.2% is direct traffic, 19% is referral traffic, and 12.3% is organic search traffic.
SaaS Adoption Statistics
14. Companies allocate 21% of their budget to SaaS apps.
Companies are allocating budgets to SaaS apps in quite a few sectors. On average, they spend 12% on operating systems, 10% on virtualization, 10% on productivity, and 10% on security software.
15. Companies spent an average of $343,000 on SaaS in 2018.
A whopping 78% increase in company spend from 2017 marked the success of SaaS in 2018. Over the last five years, SaaS spending increased across all company size segments. Companies with 0-50 employees spent over $20,000 on SaaS. Small companies with up to 100 employees spent close to $160,000. Large companies with more than 1000 employees spent more than $7,000,000.
16. 59% of companies switched to SaaS by the end of 2019.
(Source: Finances Online)
According to Cisco’s global cloud index, more and more companies are adopting SaaS. In fact, SaaS will be responsible for 75% of the cloud workload among companies by 2021. There is a very real chance that a massive 95% of all workloads will migrate to the cloud. 64% of businesses consider this could happen in 7 years or more, while 13% strongly believe it is never going to happen.
17. Many industries are embracing SaaS.
According to the latest SaaS adoption statistics, the internet and software industry is leading in SaaS adoption. Almost 90% of companies in this sector use mailing and core business apps. More than 80% of companies in the marketing and advertising industry rely on cloud-based technology. Next up is biotechnology and pharmaceuticals with 81%, real estate with 80%, and the retail industry with 70%.
18. The SaaS market will reach a greater market size than PaaS and IaaS combined.
The SaaS market is anticipated to grow to $113.1 billion by 2021. The IaaS market is expected to grow to $63 billion in the same time period, while PaaS will grow to $27 billion.
19. The SaaS revenue will grow to $110.5 billion by 2020.
According to predictions and the current state of the SaaS market, Gartner estimated SaaS revenue at $94.8 billion at the end of 2019 and projected it to grow to $110.5 billion by the end of 2020.
20. According to SaaS stats, the SaaS market will grow by 27.6% in 2020.
SaaS is the fastest-growing sector of cloud computing. And this is going to boost SaaS revenue significantly.
21. SaaS Combined with AI could revolutionize the way we work.
This is an emerging trend that may as well spark the fourth industrial revolution and completely transform the way the workforce operates in many industries. Allowing AI to perform menial tasks and process large amounts of data will not only save many companies money and time, but also allow their employees to focus on more important aspects of their roles.
For example, a sales team spends about 80% of the time researching and qualifying a lead and 20% of the time closing the deal. Having AI automate the research process and feed the results to the team would reduce the workload amount tremendously.
22. SaaS organizations operate in more than 100 countries.
Most predominantly, 65% of SaaS companies operate in Europe and the US. On the other hand, more than 85% SaaS customers are in the developing world, mainly in Asia, Africa, and Latin America. Some examples of AI investing are already in full motion.
SaaS Retention Stats
23. More than 50% of SaaS companies increased their spending on customer retention.
Customer retention spending increased further in 2017. This is what made the net retention rate rise to 115% and higher. In order to retain a larger customer base, 44% of SaaS companies offer a free trial for their product or service. Specifically, 41% of those companies offer a generous 30-day trial, while 18% offer a 14-day trial.
24. SaaS Companies consider customer retention very important.
55% of SaaS companies rate customer retention as one of the most important metrics to keep track of.
SaaS Churn Rate Statistics
25. The median SaaS business loses 10% of its revenue to churn every year.
This is about 0.83% of revenue each month. If a company’s net revenue churn is higher than 2% per month, there is a problem in how the company is being run, which will have a dramatically negative effect on its growth.
26. The main cause of customer churn is poor customer service.
Avoidable customer churn is costing SaaS businesses $136 billion a year. Zendesk found that 66% of consumers terminated their relationship with a company because of poor customer service. 48% of consumers decided to seek out an alternative to the original product or service they had in mind because they weren’t happy with the customer service they received. If customers have a negative experience or interaction with the product or service, 58% of them won’t be giving the company a second chance.
SaaS Acquisition Stats
27. New customer acquisition is crucial to SaaS businesses.
89% of SaaS companies focus on new customer acquisition to generate revenue. 59% consider existing customer renewals to be a priority, while 46% prioritize upselling and add-on sales.
28. Unique website visitors are the top customer acquisition metric for SaaS companies.
84% of companies focus on unique website visitors. 66% focus on the number of new trials or free sign-ups. Then, 56% value conversion rates from free trial to paying customer. Finally, 56% of companies also pay close attention to customer acquisition costs.
29. In 2017, customers considered many factors before purchasing a SaaS app.
59% of customers considered the cost to be the main factor that led to acquiring a new SaaS app. 47% considered the security of the app before purchasing. 38% were attracted by ease of use, 30% went for integration, 24% for customer support, and 23% for admin and management capabilities.
What’s more, 15% were persuaded by uptime guarantees, 13% took scalability into consideration, 12% appreciated customizability, and 12% were motivated to purchase after reviewing a disaster recovery plan suitable for their needs.
SaaS Sales Statistics
30. SaaS companies understand the importance of upselling customers.
54% of SaaS companies treat upselling and add-ons as a high priority. This proves to be a good strategy, as it is up to four times cheaper to upsell existing customers than to acquire new ones. An average company would need to spend only $0.28, in order to generate an additional dollar of revenue.
31. Upselling generates a big revenue for SaaS companies.
The average SaaS business will generate up to 16% of a new Annual Contract Value just through upselling their existing customer base.
33. Pricing is an important factor for SaaS companies.
In fact, your average SaaS company will spend at least six hours attempting to determine the best pricing strategy for their product or service. 17% of SaaS companies will choose the freemium pricing model. 41% of companies will clearly state the price on their website, while 46% of companies have “per user” pricing strategies.
34. Free Trials are an important part of a SaaS company
This ultimately affects whether a customer will buy the product or not. That’s why 44% of SaaS companies are happy to offer their users a free trial.
Wrapping It Up
SaaS has a very bright future ahead of it, as the latest astonishing SaaS stats reveal. With a tremendous growth rate much higher than that of the alternatives, more companies will approach and adopt the SaaS model.
So, it is only a matter of time before this cloud-computing model grows from an advantage to a necessity for nearly every company.
While IT firms need to re-evaluate priorities and establish new processes to help them work efficiently in a cloud-based environment, there is no denying that SaaS is a force to be reckoned with.