Software as a Service (SaaS) is a software distribution model where apps are hosted by a vendor or service provider and made available over a network to a range of customers / end users. SaaS is one of the most lucrative cloud businesses today. Right now, the global SaaS market is worth an estimated $49 billion, but in 2018 that valuation will rise by 37% to reach $67 billion, according to research done by International Data Corporation (IDC), Forrester, Gartner, Ovum, and Wikibon.
This is not the first time we’ve heard good news for the cloud industry looking ahead at a five-year roadmap. Just last week, we wrote that the Unified Communications (UC) market – one of the most preponderant users of cloud technology – is estimated to reach $75 billion valuation by 2020. Global spending on Infrastructure-as-a-Service (IaaS) is also expected to rise, reaching $16.5B this year (up 32.8% from 2014).
Even more interesting, cloud applications will reportedly make up 90% of worldwide mobile data traffic by 2019, which speaks volumes about our urge for connectivity and remote access to information. In other words, 9 out of 10 apps on our smartphones and tablets will be cloud -enabled in less than four years from now. By the end of the decade, even a simple tool like the Compass app on your smartphone could be cloud-enabled.
Cloud experience matters
The Economist Intelligence Unit study, in conjunction with IBM, revealed that the more experienced an enterprise is with cloud computing, the more likely that organization is to use cloud-based apps to boost customer demand strategies. Cloud-mature enterprises also invest heavily in expanding their sales channels.
At the other end of the spectrum, enterprises with a low level of cloud maturity struggle with improving internal business-process efficiency and try to leverage the cloud to reduce costs and/or liabilities.
Most SMBs (64%) are already using a combination of 3 cloud-based apps on average, and 78% are reportedly considering purchasing new solutions in the next 2-3 years. By 2018, the average number of cloud apps used by SMBs is expected to be 7.
The enterprise application software market will grow to reach $150 billion in 2015, and $201B in 2019, according to Gartner. According to the research, the growth is being primarily triggered by alternatives to traditional on-premises licenses, including SaaS, hosted license, on-premises subscriptions and open source. By 2020, around 25% of organizations in emerging regions will run their core CRM systems in the cloud – a 10 percent increase from 2012.