Softwares as a service, referred to as SaaS in the tech industry, have become cornerstone technologies for businesses and consumers all over the world.
These online applications are accessed directly on the internet, eliminating the need for clunky hardware, complex maintenance, and manual product updates.
SaaS solutions have revolutionized the way businesses work and grow, automating many of the processes that previously took hours of time or significant manual labor to complete.
Today, SaaS solutions exist in nearly every industry. Niche markets have taken on monikers like fintech, insurtech, fashion tech, health tech, food tech, etc…B2B, B2C organizations, and direct consumers use SaaS tools every day to increase professional and personal productivity.
In this article, we share 50+ compelling statistics on SaaS growth, spending, and more. Read through for a deeper understanding of this booming market, and how these technologies are adapting to new demands going forward.
Growth of the SaaS industry
The SaaS industry has seen unprecedented growth in recent decades, driven by an increasing preference for automation over traditional manual processes and legacy softwares. This growth is supported by private and public investors, and continues to increase exponentially in key markets. Let’s take a closer look at the widespread success of the SaaS industry and its predicted trajectory in the near future.
- The US SaaS sector saw record levels of US venture capital investment in 2021: $94 billion USD invested across 4,459 deals. (Silicon Valley Bank)
- The average public SaaS company is now worth $27 billion. (SaaStr)
- It’s estimated that by 2025, 85% of business apps will be SaaS-based. (Bettercloud)
- The SaaS industry is projected to experience its largest annual growth between 2021 and 2022, reaching a value of approximately $172 billion USD by the end of the year. (Exploding Topics)
- By 2026, public cloud spending is predicted to exceed 45% of all enterprise IT spending. (Gartner)
- Marketing and sales remain the highest expenses of SaaS companies, amounting to 50% or more of their revenues. (McKinsey)
- End-users will have spent more than $438k on SaaS subscriptions since 2020. (Gartner)
SaaS growth in key markets
The US, UK, Canada, and Germany have the most SaaS companies in the world, respectively. But the US leads with a huge margin, with more than 8x the number of SaaS businesses compared to the runner up, the UK.
Graph by Statista 2022
- There were 25,000 SaaS companies worldwide in 2021. Almost 7,000 of those were in the marketing sector. (Ascendix)
- The US has nearly 17,000 SaaS companies and 59 million customers worldwide. (Statista)
- The UK follows the US with 2,000 SaaS companies and 3 billion customers worldwide. (Statista)
- Private SaaS funding in Europe is seeing 3.2x year over year growth. (Paddle)
- Investments in Indian SaaS companies increased to $4.5 billion in 2021, a 170% increase over 2020. (Economic Times)
Graph by Economic Times India
- The SaaS industries in China, India, and Brazil are expected to grow by over 2x between 2020 and 2025. (Reply)
- Germany is expected to experience the largest increase in SaaS market growth from major markets by 2025, from €6.85 billion to €16.3 billion. (Statista)
- SaaS is the leading startup model in Brazil, making up 41.12% of all Brazilian startups in 2020. (Associação Brasileira de Startups)
- China’s cloud infrastructure spending surged by more than 32% in the last quarter of 2019, from around $107 billion to $142 billion in 2020. (SaaS Industry)
- In 2021, there were more than 337 SaaS unicorns and 15 decacorns (valued at more than $10 billion USD) in the US. (SaaStr)
- There were 81 European SaaS unicorns in 2021, up from 44 in 2020. (Accel)
The biggest players in SaaS
- As of June 2022, Adobe Inc. is the largest SaaS company in terms of market cap, followed by Salesforce, and Intuit. (Mike Sonders)
- On G2, the top 3 rated SaaS apps for “Best Software Products 2022” are Gong, Chorus.ai, and Amplitude Analytics, respectively. (G2)
- In 2020, the top 15 SaaS companies had a $1.4 trillion market cap and $80 billion in revenue. (Tech Times)
COVID-19’s effect on the SaaS industry
Pandemic-fueled restrictions forced many companies to implement work from home policies overnight. For both experienced and first-time remote workers, SaaS apps became essential resources to continue running business as usual–from video conferencing and company messaging apps (think Zoom and Slack), to cross-team collaboration platforms like Google Workspace and Microsoft Teams.
- Permanent remote positions in the US doubled from 9% to 18% during the last quarter of 2021, and could increase to 25% by 2022. (Ladders)
- Amid the COVID-19 crisis, the global market for web/video conferencing SaaS was estimated at $3.5 billion USD in 2020. This is projected to reach $7 billion USD by 2026. (Report Linker)
- Zoom recorded 148% revenue growth in 2019 to 2020, from $90 million USD to $225 million. (Statista)
- Among enterprises, 30% reported significantly higher than planned spending on cloud usage due to COVID-19 (Flexera)
- There was a 176% increase in collaboration apps installed on enterprise devices after the COVID-19 crisis in May 2020 alone. (Impact My Biz)
- The global online collaboration market is expected to increase from $12.4 billion in 2019 to $13.5 billion in 2024 (Apps Run The World)
- In 2020, 66% of US employees worked remotely due to COVID-19 fears and protocols. (PR Newswire)
The pandemic also sparked the Great Resignation, an economic trend that saw more than 40 million Americans quit their jobs in 2021. SaaS companies were not invulnerable to the Great Resignation, but numbers show that they were less severely impacted than other industries–notably the service, retail, and hospitality sectors.
- Medium-growth (10-50% annual revenue growth) SaaS companies saw around 11% quits over the year, while companies with less than 10% growth saw an average of nearly 15% of their workforce voluntarily leave during 2021. (SaaS Capital)
- The fastest-growing SaaS companies (annual growth rates over 50%) saw only half as much voluntary turnover as the slowest, around 7.5%. (SaaS Capital)
Graph by SaaS Capital
SaaS operations (SaaSOps) now a bonafide business function
As Bettercloud explained in their 2020 report, “IT organizations are discovering that managing and securing SaaS environments at scale can be a very difficult and time-consuming process.”
This has fueled the need for teams that can design and implement frameworks that support smooth SaaS operations in fast-growing companies. Today, SaaSOps has evolved into a core IT discipline and priority for modern businesses.
- 94% of IT executives believe manual SaaS management methods lead to poor decision-making about SaaS spending. (Productiv)
- 48% of businesses want to improve their management of SaaS products in the next year. 54% want to optimize and find savings in their software spend. (Flexera)
- Companies with SaaSOps platforms use twice as many SaaS tools compared to non-SaaSOps businesses. (Bettercloud)
- 25% of IT teams say that they spend the majority of their time managing third-party vendors and business solutions. And 31% involves maintaining compliance and security. (Productiv)
SaaS security challenges
One of the biggest concerns for IT teams is the security of sensitive company data. The main risks are data leaks to the public, or former employees retaining data after off-boarding.
- 56% of enterprise apps aren’t managed, meaning no one pays close attention to things like renewal dates, licenses, app usage, security, and compliance. (Productiv)
- On average, it takes 7.12 hours to off-board a user across a company’s SaaS apps–without a SaaSOps platform. (Bettercloud)
- The biggest challenges in using public cloud for business are security (66%), compliance (60%), lack of staff training/experience (58%), privacy (57%), vendor lock-in (47%), and cost (40%). (Logic Monitor)
- Insider threats, which include former employees who retain access to an organization’s SaaS apps, are responsible for 22% of security incidents. (Security Boulevard)
- On average, every enterprise now has 4.3 orphaned apps and 7.6 duplicate apps. (Chief Martec)
How are SaaS tools used
Millions of people around the world rely on SaaS tools everyday, most often with a desire to increase productivity and reduce costs. They enable teams to work faster and collaborate more efficiently than ever before. Companies also use SaaS tools to enhance customer experiences and create closer connections with their target audiences.
Logistically, this means an increasing number of businesses are transitioning their operations online. Cloud-based SaaS apps provide teams with increased accessibility, free from geographical constraints and real-time updates enabling quicker responsiveness. These have been game-changing resources for international and fast scaling workforces.
- SaaS is thought to be the most important tech in business success. (Exploding Topics)
- Around 45% of small and medium-sized businesses have most, or all of their business applications in the cloud. (AppDirect)
- Since the onset of COVID-19, B2B companies say digital interactions are two to three times more important to customers. (Copy Noise)
- 79% of businesses said that using a live chat tool helped increase customer loyalty, revenue & sales. (Kayako)
- On average, young companies (1-2 years old) start out with 29 SaaS apps. By the time they’re 3-6 years old, that number spikes to 103 apps. (Bettercloud)
Graph from Bettercloud report
- The average SaaS company has around 36,000 customers. This number goes up to 85,000 for public SaaS companies that mainly sell to SMBs. (Saastr)
- 66% of enterprises already have a central cloud team or a cloud center of excellence. (Web Tribunal)
What companies are spending on SaaS
The amount of funds companies and consumers have spent on SaaS tools has skyrocketed in past years. For businesses, SaaS budget allocation often depends on the industry they’re in, what tools they need, and what their business priorities are. The size of the team also affects the amount of money spent on SaaS apps.
- Total end-user spend on SaaS apps is expected to exceed $172 billion USD in 2022, a near 450% increase since 2015. (Finances Online)
Graph from Finances Online
- 57% of European and US companies increased their SaaS spending last year (Paddle)
- Overall spend per company on SaaS products is up 50%,and the number of unique apps in usage per company is up about 30% year over year. (Blissfully)
- Freemium SaaS tools convert 25% more customers without the need for sales than free trials. (Copy Noise)
- Companies are churning through more than 30% of their apps every year and SaaS waste is doubling year-over-year. (Blissfully)
Data from Blissfully’s 2020 SaaS report
- Only 36% of traditional companies allocate budget to SaaS solutions and operations, while 44% of transitioning organizations set aside a budget for SaaS. (Finances Online)
The power of SaaS for finance teams
As our way of working continues to evolve, adoption of and reliance on SaaS technologies grows rapidly in all sectors. Automation tools and cloud-based softwares reduce significant costs and inefficiencies for business owners, managers, and IT teams.
It’s also evident that investing time and funds into a proper SaaSOps team is important to building the right company structure for effective and secure SaaS usage.
For finance teams, the benefits of SaaS solutions goes even further. Fintech tools like Spendesk streamline expense management and increase data accuracy, helping businesses spend smarter and safer. Real-time spend data helps you save time, boost productivity and build trust–all while giving employees more autonomy to make the best spending decisions.
Want to see how it works? Try Spendesk right here with an interactive walk-through.