Significant Growth in SaaS Market by 2026 – Technavio Report

According to a recent market report by Technavio, the SaaS market is expected to experience significant growth, with an anticipated increase of USD 147.44 billion between 2022 and 2026. The market is forecasted to accelerate at a CAGR of 11.41% during this period.

The report provides a comprehensive analysis of the SaaS market, including market size and growth forecast, trends, drivers, challenges, and vendor analysis. The segmentation of the market is based on deployment (public cloud, private cloud, and hybrid cloud) and geography (North America, Europe, APAC, South America, and Middle East and Africa).

The report profiles several key players in the market, including Accenture Plc, Adobe Inc., Alphabet Inc., Amazon.com Inc., BetterCloud Inc, Box Inc, Cisco Systems Inc., Convedo Ltd., EdgeVerve Systems Ltd., Fujitsu Ltd., Hewlett Packard Enterprise Co., International Business Machines Corp., Intuit Inc., Microsoft Corp., Oracle Corp., Salesforce Inc., SAP SE, ServiceNow Inc., Shopify Inc., and Slack Technologies Inc, among others.

Key Drivers, Trends, and Challenges of SaaS Market

The global Software as a Service (SaaS) Market, which falls under the Application Software Industry, has been categorized and extensively researched by Technavio Research analysts. The analysts have studied the historical data and identified the key market drivers, as well as the impact of the COVID-19 pandemic on the industry. This holistic analysis of the drivers will aid in refining marketing strategies and achieving end goals to gain a competitive edge.

The report also covers external factors that are expected to influence the growth potential of the parent market in the years to come, ultimately determining the forecast year’s growth levels. The market is highly competitive, with businesses of all sizes, including large, medium, and small-sized companies, vying for a greater market share. The industry’s remarkable growth can be attributed to various factors such as product innovations and the launch of new products by manufacturers operating in the market.

SaaS Market Driver

The growth of the global Software as a Service (SaaS) market will be significantly driven by the increasing use of AI-enabled SaaS solutions. These solutions enable end-user enterprises to obtain better value from their data, providing personalized and automated services to customers through AI-powered chatbots. Additionally, AI-enabled SaaS can quicken internal processes and operations while improving security by generating quick responses to potential threats. The benefits of AI-enabled SaaS will enable enterprises to improve their internal operations and further increase its use, leading to the growth of the SaaS market.

SaaS Market Trend

One of the primary trends in the global Software as a Service (SaaS) market is the increasing use of vertical SaaS. This type of SaaS is suitable for specific industries such as retail, insurance, and auto manufacturing, and is cost-effective while offering refined customization. Vertical SaaS can also generate industry-specific customer data and intelligence, which is essential for enterprises to cater to customer needs within their niche. Vendors are focusing on providing vertical SaaS with features specific to client needs to increase their customer base, and this trend is expected to increase the demand for vertical SaaS during the forecast period.

SaaS Market Challenge

The major challenge for the software as a service (SaaS) market during the forecast period is the issues associated with system integration. Enterprises are adopting SaaS solutions as a cost-effective alternative to traditional IT deployments, which require them to buy or build their own IT infrastructures, install software programs, configure applications, and employ an IT department to maintain all the facilities. SaaS helps enterprises cater to their customers efficiently and improve business processes, but they face difficulties when integrating new software systems and IT infrastructure. Integrating new software programs into an existing monolithic architecture is challenging for enterprises as the functionalities of such an architecture are interwoven, making it hard to integrate new software programs and systems. These issues associated with system integration pose a challenge for the growth of the global Software as a Service (SaaS) market.

Market Overview

The global IT software market comprises companies that develop and produce application and system software, including those offering database management software. The global application software market includes companies developing software for specialized business or consumer applications, including enterprise, technical, and cloud-based software. The market excludes companies producing systems or database management software classified in the systems software sub-industry and those classified in the interactive home entertainment sub-industry.