Software as a Service (SaaS) actually originated in the 1960s, although it was originally called a time-sharing system.
It was fairly popular in the 70s and 80s, but, as computing really started to take off in the 90s, that’s when it became extremely popular and SaaS has become essential for businesses and individuals.
In essence, SaaS is the key to accessing cloud-based internet services, specifically apps.
For example, using Google Calendar or any type of email.
The following SaaS statistics will illustrate how popular and beneficial SaaS is.
You download the app while the program and data are stored in the cloud.
The app allows you to connect to the data from anywhere in the world and from any computer. All you need is the correct login details.
It’s not only efficient, it requires minimal cost to get started, making it the perfect choice for any new business.
Of course, the cost-savings and efficiency of using cloud-based apps also means it works well for established businesses.
There are an array of free SaaS apps, such as Gmail. You’ll also find apps that need to be paid for.
These tend to offer more specific features that you and your business need.
The good news is you pay for what you use.
- The SaaS industry has an estimated worth of $195 billion
- Encryption is the biggest concern
- The US has eight times more SaaS then anywhere else
- 70% of business software is now SaaS
- It’s estimated 99% of businesses will use at least one SaaS solution by 2024
- Larger organisations use more SaaS apps
- 73% of people view SaaS as important to business success
- US SaaS businesses have 14 billion global customers
- The biggest US SaaS company is Salesforce.com
- 38% of businesses only use SaaS applications
- It’s estimated there are 7,000 SaaS businesses for the marketing industry
- 56% of SaaS businesses don’t offer free trials
- A new SaaS business will spend over 90% of its revenue on attracting customers
- 86% of businesses running SaaS have noticed higher employee engagement
- The healthcare industry SaaS adoption rate increases by 20% a year
- 33% of SaaS companies have churn rates of 5% or lower
Top SaaS Statistics in 2023
1. The SaaS Industry Has An Estimated Worth Of $195 Billion
The SaaS industry has been growing steadily for two decades.
However, in the last five years it has grown dramatically.
Predictions show that it will continue to do so, potentially becoming one of the largest industries in the world.
In 2017 the industry was worth just $44 billion. By 2019 it had doubled in size to $85 billion.
It grew by another $30 billion in 2020 and an impressive 50 billion in 2021, giving it a value in 2021 of $165 billion.
As of 2022 the industry has grown a further $21 billion and is currently worth $186 billion.
If the trend continues the global SaaS industry will be worth in excess of $250 billion by the end of 2025.
By the end of 2030 it’s expected to have reached a colossal $700 billion.
It’s worth noting that one in five businesses maintained the same level of spending on SaaS apps throughout the global pandemic.
This helped to maintain industry values and illustrates how important these apps have become.
2. Encryption Is The Biggest Concern
The downside to SaaS applications is that they are all online, which means there is a higher risk of data breaches and confidential information being stolen.
In a recent study, 38% of those that responded admitted to being very concerned about security, specifically the encryption used by the service provider.
This concern was closely followed by the encryption of data and how secure/available the process was to store and manage encryption keys locally.
37% of respondents were concerned about this.
In short, businesses are worried about whether the encryption is strong enough and where it is controlled/stored.
Interestingly, very few respondents were worried about support for hardware modules, regardless of whether they were locally generated or sat on the cloud.
3. The US Has Eight Times More SaaS Then Anywhere Else
The US economy is the largest in the world which makes it unsurprising that it has more SaaS firms than any other country.
However, what is surprising is the volume of SaaS in the US.
Current studies show it has eight times more than any other country.
SaaS in the US is also expected to keep growing. It’s estimated the US SaaS industry will grow from $108 billion in 2020 to $225 billion by the end of 2025.
The second largest SaaS industry in the world is the UK, it’s currently valued at $14.5 billion.
However, Germany is expected to hit $16.3 billion by 2025 and France should hit $11.05 billion by 2025.
In terms of numbers, the US currently has over 17,000 SaaS companies. The Uk and Canada have just 2,000.
While there will be large increases in SaaS companies across the globe, they have a long way to go.
Currently, Germany, France, and India have just 1,000 SaaS companies each, and China has a mere 707.
4. 70% Of Business Software Is Now SaaS
Organizations are increasingly turning to SaaS to give them the solutions they need.
It’s inevitable as the digital revolution continues and global solutions are required.
The result is that, on average, 70% of company software is now SaaS applications.
They are simply more efficient and generally a cheaper option for businesses.
The figure is backed up by app usage studies. They show that in 2015 the average company had 8 SaaS apps.
By 2016, the number had increased to 12.
Then, in 2017 this moved to 16 SaaS apps. Today, the figures show the average number of SaaS applications per business is 80!
5. It’s Estimated 99% Of Businesses Will Use At Least One SaaS Solution By 2024
As of 2022 studies showed that 84% of businesses were using a SaaS app.
These studies also predict that by the end of 2024 this figure will become 99%.
In other words, nearly every business in the world will be using SaaS apps.
Of course, this doesn’t mean they will exclusively use SaaS apps.
The study simply suggests all companies will see the benefit of SaaS and be experimenting with at least one app.
It’s likely just a matter of time before every company uses SaaS apps and nothing else.
This study takes things a step further and predicts that by 2025 50% of businesses using SaaS will be looking at centralizing their SaaS management.
6. Larger Organisations Use More SaaS Apps
Larger businesses don’t necessarily need more software apps than smaller ones.
In many cases, they use less as they can afford to have apps developed which cover multiple functions.
However, a recent study by BetterCloud showed that this wasn’t generally the case.
Rather than having specific SaaS apps written for a firm, larger businesses are utilizing what is already available.
The study found that companies with over 1,000 employees generally have at least 150 SaaS apps.
In comparison, businesses with less than 50 employees only used 16 apps on average.
Businesses with between 50-99 employees used an average of 24 SaaS apps, while those with between 100-499 employees used a more impressive 47 apps.
That’s not many apps compared to businesses with over 1,000 employees.
7. 73% Of People View SaaS As Important To Business Success
A recent survey of 1,724 businesses found that 35% of respondents deemed SaaS to be quite important for business success.
Impressively, 38% of those asked thought that SaaS was very important to the success of any business.
The study doesn’t highlight which of its respondents were already using SaaS, which would obviously influence the answer.
However, the fact that 73% of those questioned felt that Saas was important, to some degree or another, shows how vital it is becoming to businesses in all industries.
The survey also looked at other things which are considered essential to business success.
Big data scored highly with 72% claiming it was of some importance.
Interestingly, blockchain, virtual reality, and augmented reality came bottom of the list, just over 20% of people thought these were necessary for success.
8. US SaaS Businesses Have 14 Billion Global Customers
The latest figures regarding company numbers date from 2021.
At that time it was estimated that the total number of global customers belonging to US-based SaaS businesses was over 14 billion!
That doesn’t just show you how popular US-based SaaS businesses are.
It also indicates the sheer number of businesses in the world.
After all, 14 billion customers is nearly twice the number of people living on the planet.
More recent figures show that this trend is continuing as 56.67% of global SaaS businesses are based in the US.
9. The Biggest US SaaS Company Is Salesforce.com
Microsoft is considered the largest SaaS company by geographic area, it covers the entire planet and has more customers than any other SaaS business.
However, many of its products are free. That’s why it’s not the biggest by value. That’s Salesforce.com.
Salesforce.com has a market cap of $183.07 billion. It offers a comprehensive CRM software solution and offers excellent customer service.
Many businesses use the service to help locate potential clients and seal the deal.
Adobe comes in second place, with a market cap of $152 billion. After this you’ll find Intuit which has a cap of $114 billion.
The fourth spot is taken by Shopify, although it’s considerably smaller than Salesforce as its market cap is just $55 billion.
10. 38% Of Businesses Only Use SaaS Applications
As an indication of how dominant the SaaS industry is becoming, the latest survey shows that 38% of companies only use SaaS applications.
It’s generally cheaper to run a business this way, allows for better access, and is the perfect way to ensure all employees can see the information they need, regardless of where they are across the globe.
11. It’s Estimated There Are 7,000 SaaS Businesses For The Marketing Industry
At present, despite massive growth in many industries, marketing remains one of the key areas where SaaS has been almost fully adopted.
Of course, this means that many SaaS companies target the marketing industry.
As of 2020, there were over 7,000 SaaS businesses offering marketing services.
In comparison, the healthcare industry, which has been growing rapidly for years, still only has 770 companies dedicated to offering SaaS systems.
12. 56% Of SaaS Businesses Don’t Offer Free Trials
You can download thousands of apps for free. Once you’ve tried them you either keep the app or uninstall it.
The process is simple and you can quickly work out which is the best app for you and your business.
However, if you’re looking at paying for an app then you want to be sure that it’s the right one before you commit your money.
Reviews can be useful, but the best way to identify useful apps is to try them.
That’s why it’s surprising that the latest study shows 56% of SaaS businesses don’t offer a free trial of their software.
It suggests that they are either too large a company to worry about churn rates, or they are more concerned with revenue generation than customer satisfaction.
44% of SaaS businesses do offer a free trial and, of these, 41% provided a 30-day free trial while 18% gave a 14-day free trial.
From a business point of view it’s best to try one of these SaaS providers first.
You may discover the perfect app and get 30-days free.
13. A New SaaS Business Will Spend Over 90% Of Its Revenue on Attracting Customers
The SaaS industry is highly competitive. The best way to get your foot in the door and become successful, is to build customer numbers fast.
The greater the customer number the higher the revenue stream, and the easier it is to cover the cost of all the employees.
In short, you’re more likely to have lower churn rates and an app that enough people are using.
With that in mind, it’s not surprising that a newly established SaaS will spend over 90% of its revenue on attracting customers.
It means the business is likely to make a loss in their first year.
But, if it works and the company attracts plenty of customers, it has the foundations of success.
14. 86% Of Businesses Running SaaS Have Noticed Higher Employee Engagement
The latest studies show 71% of businesses are using SaaS to improve their IT systems and the speed at which issues are fixed.
It’s also estimated that 63% of businesses are choosing SAS as they appreciate the flexibility the system offers.
Additionally, 58% of businesses appreciate the fact that the app is always available.
This ensures that the business can always offer its services, regardless of what else is happening.
The same study noticed that an impressive 86% of businesses have noticed employees are more engaged in their projects and providing higher-quality work.
The survey found that employees appreciated the ease with which they could access all relevant information.
It was also felt that the employer was more trusting.
This encouraged employees to want to work harder and do well in their jobs.
The higher levels of engagement show as productivity increases and are demonstrated in better staff retention rates.
15. The Healthcare Industry SaaS Adoption Rate Increases By 20% A Year
On average businesses are spending $3,000 per employee on SaaS.
That’s a significant investment and is particularly obvious in the healthcare industry.
The amount spent by the healthcare industry on SaaS, and its subsequent adoption, has increased by roughly 20% per year.
As far back as 2011, just 4% of healthcare companies were using Saas.
Thanks to a year-on-year growth of 20% growth, the industry was worth $23.4 billion in 2019 and is expected to hit $51.9 billion by the end of 2024.
As of 2018, the average business now spends $343,000 on SaaS.
That’s a whopping 78% increase on 2017. In 2020 it hit $415,000. That’s an increase of roughly 118%.
There is little doubt the SaaS industry is going to continue to grow and expand.
16. 33% Of SaaS Companies Have Churn Rates Of 5% Or Lower
The churn rate is the number of subscriptions which are canceled within a set period.
High churn rates are generally associated with low growth and the business is likely to fail.
Current reports show that 32% of SaaS businesses have churn rates of 5% or lower.
A further 32% of those surveyed revealed churn rates of 5-10% This is generally considered an acceptable rate of churn and is the equivalent of losing one in every 200 customers per year.
The study also showed 17% of companies surveyed had churn rates of between 10-15% and the remaining 19% had churn rates over 15%.
Interestingly, it’s all about the money.
Businesses that have established a turnover in excess of $10 million have an average churn of 8.5%.
In contrast, firms which make less than $10 million have a churn rate of 20%. In short, they are more likely to fail.
It’s also worth noting that nearly a third of companies have been experiencing increases in churn rates over the last 3-4 years.
Advantages Of SaaS
If you’re reading the SaaS statistics you’re probably already aware of the benefits they offer you.
Here’s a quick recap:
Access Sophisticated Apps
It can be expensive to purchase software and install it on your system.
It’s not just the purchase cost, it’s the installation and training time. The more complicated and sophisticated the software the greater the cost.
However, use SaaS and the cost drops dramatically.
That’s because you’re simply paying for access to a system, like thousands of others are.
In short, you’ll be able to access much more sophisticated apps for a fraction of the cost.
That makes SaaS an attractive prospect.
Sliding Pay Scale
In most cases the app will only charge you according to the data you’ve used.
The greater your storage and processing needs the higher the charge.
That makes it a cost-effective option. You’re just paying for what you’ve used.
There are plenty of free SaaS applications on the market and these can be very useful to businesses.
This is especially true if you’re starting up and have a tight budget.
While you may wish to upgrade to more sophisticated options in the future, the free options are a great way to get started and appreciate what SaaS can do for you.
Works Anywhere In The World
SaaS applications store all the information and the program on the cloud.
That means, all you need is a computer and internet access.
Alternatively, you can access the systems from your mobile.
In short, adding SaaS apps to your business means you, and your employees, can work from anywhere in the world.
As the above SaaS statistics show you, this is a rapidly growing industry with huge potential to keep growing.
Part of the recent drive toward SaaS apps is connected to the global pandemic.
It created the need for employees to be able to work from home. Post-pandemic many people are still working from home and businesses are increasingly investing in the appropriate tech.
Provided security concerns are considered and addressed, it’s highly likely that this industry will continue to grow, ultimately ensuring that all businesses use this tech.
That’s perhaps the most fascinating thing about these statistics.
It’s effectively a revolution in the way businesses operate and that’s a significant stage in history, on,e that we are all here to experience today.
Most businesses are welcoming this change, if you haven’t yet tried a SaaS app, then you should do so today.