Quarterly SaaS spending hits $20 billion – with Microsoft continuing to hold a solid lead

Microsoft continues to hold a solid lead in the enterprise SaaS market ahead of Salesforce – but even though the market can be considered mature there is plenty more potential to come.

That is the key finding from the latest note by Synergy Research. The analysis, which comes from Q2 data, notes that the enterprise SaaS market is new generating $20 billion in quarterly revenues for vendors. Microsoft holds 17% of the overall market, with Salesforce the nearest contender and the only other company to hold more than 10% share.

Microsoft is also the fastest growing company with 45% annual growth. Oracle, with just over 5% overall share, saw 43% growth, with SAP (36%), Adobe (32%) and Salesforce (25%) all solid.

While everyone is seeing solid growth, it also plays into the fact that the market is somewhat fragmented with different areas for growth. Per the company’s figures from this time last year, Microsoft, Cisco and Google dominate collaboration, with Salesforce, Microsoft and Zendesk in CRM and Oracle, SAP and Infor for ERP.

“There is a fascinating battle for SaaS playing out, with traditional enterprise software vendors slugging it out with born in the cloud vendors like Workday, Zendesk, ServiceNow and Dropbox,” said John Dinsdale, a chief analyst at Synergy. “The latter group are helping to rapidly transform the market, but the more traditional players like Microsoft, SAP, Oracle and IBM still have a huge base of on-premise software customers that they can convert to a SaaS-based consumption model.

“Meanwhile Cisco and Google too are making ever-bigger inroads into the SaaS market, via Cisco’s collaboration apps and software vendor acquisitions and Google’s G Suite,” added Dinsdale.

Looking at the most recent figures, IBM last month announced a third consecutive quarter of revenue growth, with cloud revenue up 20% and representing almost a quarter of the company’s total revenue. From SAP’s perspective, the company raised its 2020 outlook, having previously praised ‘stellar cloud bookings’ earlier this year.