When you have doubts about making an important decision, you’d probably start searching for a certain sign to convince you it has to be done. Of course, deciding whether to start a software-as-a-service (SaaS) business or not can’t rely on signs. You need something reliable and solid.
What can be more straightforward and convincing than data and statistics? Plain numbers won’t sound too convincing, however, which is why the JatApp team prepared not only a bunch of statistics showing SaaS industry growth, but also shared some thoughts and explanations on where the SaaS market is pivoting to.
But if you do need a sign to start a SaaS business, we actually have one for you: the current SaaS market size is $148.75 billion and it will be $702.19 billion in 2030, which means that the industry’s annual growth rate will be 18.8%. In case that’s enough for you, we are happy we managed to persuade you that fast. But if you are looking for more details, bear with us!
SaaS industry, show us your numbers
The SaaS industry growth is impressive, and the statistics shout out loud about that. Let’s take a closer look at the data.
Data: Gartner published a SaaS industry report stating that public cloud services spending will grow from $490 billion in 2022 to $591.8 billion in 2023 with a 20.3% growth rate.
What it means: Macroeconomic instability and global inflation make businesses keep relying on SaaS solutions. SaaS products are the main driver of business growth in times when even a small company has to be agile enough to cope with challenges caused by the economic uncertainty. As a result, people will need SaaS in one way or another, which means your product has all chances to find its devoted customers.
Largest SaaS companies
Data: Exploding Topics reports that Adobe, the largest SaaS company, has managed to earn $174.1 billion of market capital in 2022, which is $6.7 billion more than other SaaS companies earned. However, impressive numbers about the biggest SaaS businesses don’t end here. According to BMC, Shopify has grown by 225% since 2020 when its value was $52.1 billion. Today, Shopify is worth $185 billion.
What it means: You may think that such whopping numbers say that big SaaS companies monopolize the industry, so there is no room for new startups. If you are going to compete with Adobe, you’re probably right. But the above-mentioned figures aren’t about the market power of Adobe, Shopify, and other tough guys dominating the industry. A sharp rise of value amongst top SaaS companies means that they successfully used the capital they earned before and managed to make even more money.
We can draw a conclusion that the SaaS market doesn’t present any hurdles to growth of your business. You just have to manage your capital wisely to make your SaaS product have a front-row seat at the market.
Data: BMC report also states that Docsend acquired Dropbox for $165 million, while Chorus.ai became a part of ZoomInfo for $575 million in 2021.
What it means: The meaning of these numbers is simple. Businesses are ready to merge with SaaS companies, which means that more and more organizations are going to use software-as-a-service business models. It’s just one more proof of SaaS market growth, and you have a chance to start a business that is full of opportunities.
SaaS companies going public
Data: BMC reports that the number of SaaS companies that managed to reach their initial public offering (IPO) and start public trading of their stock assets has grown by 125% since 2020.
What it means: You may have doubts whether SaaS companies survive at all. We won’t lie, many, many startups fail, but such immense growth of SaaS companies going public underlines that market conditions are favorable for new players. SaaS startups manage to get funding, capitalize on it, and eventually become profitable enough to go public. So, despite all challenges, SaaS development is a stable, profitable, and growing business.
Data: The same report by Exploding Topics suggests that SaaS solutions represent 70% of the software used by businesses today. By 2025, this percentage will be as high as 85%. In fact, 99% of businesses already use one or more SaaS products. Companies with 1,000 employees and more use around 150 different SaaS solutions. At the same time, 78% of small firms have invested in the use of SaaS for achievement of their business goals. Actually, firms with fewer than 50 employees use 16 SaaS products, while small businesses with 50 to 99 employees use on average 24 SaaS solutions, which is a 50% increase.
What it means: Businesses are adopting SaaS solutions like crazy. As we see that business size doesn’t matter much, you have a greater choice of what target audience you’re going to aim your SaaS product at. You can offer robust yet inexpensive SaaS solutions to small and medium businesses and still make a tidy profit.
Users’ attitudes to SaaS
Data: Harvey Nash Group surveyed 1,724 respondents from different companies, and 73% of the participants confirmed that they find SaaS products important to the success of their business. More specifically, 38% of participants called SaaS “a very important component”, and 35% “quite important”.
What it means: Users appear to strongly appreciate SaaS products, but we have to emphasize that they definitely meant SaaS solutions that deliver real value to them. That’s why it’s not enough to just build a SaaS product. A SaaS solution won’t be popular with the target audience, in case it doesn’t have a unique value offer. Also, this statistics is a clear indication that you should care a lot about the user experience (UX) of your product, because many people do rely the success of their jobs and businesses on SaaS.
Main factors behind these numbers
Why do we see that SaaS gains a foothold at a break-neck pace? There are several factors behind this staggering growth:
- Suitable business environment. Companies don’t need legacy software and outdated processes as they won’t simply survive a fierce competition. Consequently, as-a-service business models offer a win-win solution for companies and SaaS providers. Businesses adopt newest tech solutions at a manageable cost while SaaS companies have constant cash flows that guarantee profitability in the long run.
- Opportunity to pursue business goals and remain as flexible as possible. SaaS provides businesses with agility they didn’t have before. The majority of SaaS products offer tiered pricing models that significantly optimize costs according to the needs of each user. In such a way, every company gets the right tool to tackle their daily tasks without overpaying for features and services they don’t need.
- Cost reduction on IT infrastructure. Data storage and cloud computing are much cheaper than on-premise solutions. Companies are ready to invest in cloud infrastructure because they’re able to get more advantages and opportunities at a much lower cost than with traditional hardware and storage.
Now is the best time to start your SaaS business
The numbers we’ve discussed in this article, as well as the main sign in the beginning, certainly point at one thing: you don’t have to wait for tomorrow to come and start a SaaS company today. JatApp can help you with that: from assembling a tech team for product development to the solution’s ideation, business analysis, and proper marketing. Our company has been developing SaaS products since 2015, and 99% of our customers left positive feedback about solutions we delivered to them.
Start developing a sparkling SaaS solution with JatApp. Tell us about your project, and we’ll get back to you to discuss the details.