Microsoft closed the first quarter of 2019 with a worldwide market share of 17 per cent of the enterprise software-as-a-service (SaaS) market.
According to data from Synergy Research Group, Microsoft continues to enhance its overall market leadership primarily due to its dominance in the high-growth collaboration segment.
Its annual growth over the last four quarters has averaged 34 per cent, comfortably higher than the overall market growth rate. However Microsoft's growth rate is diminishing due the massive scale it has achieved.
In the first quarter, the overall SaaS market generated more than US$23 billion of revenue for software vendors and will hit a US$100 billion annual run rate in the current quarter. The market continues to grow at almost 30 per cent per year, according to the research firm.
As a dominant player in the CRM space, Salesforce is the second ranked vendor in the overall enterprise SaaS market with 12 per cent. However, Synergy stated that this segment has relatively low growth compared to other SaaS segments.
The two leaders are followed by Adobe, SAP and Oracle, with SAP achieving the highest growth rate among these three, or 39 per cent.
Together, these top five SaaS vendors now account for just over half of the total market. The next ten vendors account for another 26 per cent of the market, which includes Cisco, Google, IBM, ServiceNow and Workday.
Among these ten, the vendors with the highest growth rates are Google, ServiceNow and Workday. The research firm notes that the market remains quite fragmented, with different vendors leading each of the main market segments.
"The SaaS vendor landscape essentially breaks out into three camps – traditional enterprise software vendors, relatively new born-in-the-cloud players and large IT vendors that are looking to expand more into software markets," said John Dinsdale, chief analyst at Synergy Research Group.
"In the first camp you have companies like Microsoft, SAP, Oracle and IBM that have a huge base of on-premise software customers that they can convert to a SaaS-based consumption model. Born-in-the-cloud vendors include Workday, Zendesk, ServiceNow, Atlassian and Splunk, who tend to have much higher growth rates," ," Dinsdale explained.
"Meanwhile Google and Cisco are making an impact in the SaaS market, via Google’s G Suite and Cisco’s collaboration apps and multiple software vendor acquisitions. There will be consolidation, with the impending Salesforce acquisition of Tableau Software being a prime example, but there will remain many opportunities for new market entrants to make an impact."
The SaaS market accounts for just over 20 per cent of total enterprise software spending and therefore remains small compared to on-premise software. According to Synergy, this means SaaS growth will remain buoyant for many years to come.
While SaaS growth rate isn’t as high as IaaS and PaaS, it is substantially bigger and will remain so until 2023. Synergy forecasts strong growth across all SaaS segments and all geographic regions.