Microsoft Stays Ahead of Salesforce in Growing SaaS Market

Most of Microsoft's growth can be directly attributed to the huge growth in the adoption of Office 365 during the last two years.

synergy saas

New Q4 2016 data from Synergy Research Group released Maarch 10 indicates that the enterprise SaaS (software as a service) market grew a whopping 32 percent year over year to nearly $13 billion in quarterly revenues, with ERP and collaboration being the highest growth segments.

For the third successive quarter, Microsoft was the clear leader in overall enterprise SaaS, having overtaken longtime market leader Salesforce. Most of this growth can be directly attributed to the huge growth in the adoption of Office 365 during the last two years.

Other leading SaaS providers include SAP, Oracle, Adobe, ADP, IBM, Workday, Intuit, Cisco Systems and Google. Among the major SaaS vendors those with the highest growth rates were Oracle and Google, the latter thanks to a big push for its G Suite collaborative apps.

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The researcher said that enterprise SaaS market has matured somewhat compared to other cloud markets, such as IaaS (infrastructure as a service) and PaaS (platform as a service) and consequently has a lower growth rate.

Nonetheless, Synergy said, it will more than double in size over the next three years, with strong growth across all segments and all geographic regions.

"There are a variety of factors driving the SaaS market that will guarantee substantial growth for many years to come," Synergy Chief Analyst and Research Director John Dinsdale said.

"Traditional enterprise software vendors like SAP, Oracle and IBM are all pushing to convert their huge base of on-premise software customers to a SaaS subscription relationship. Meanwhile, relatively new cloud-based vendors like Workday and Zendesk are aggressively targeting the enterprise market and industry giants Microsoft and Google are on a charge to grow their subscriber bases, especially in the collaboration market."

Reno, Nev.-based Synergy provides quarterly market sizing and segmentation data on cloud and related markets, including company revenues by segment and by region.

Chris Preimesberger

Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he has...