Software as a Service Market Assessment, By Deployment Model [Public Cloud Hosting, Private Cloud Hosting, Hybrid Cloud Hosting], By Component [Software, Service], By Use Case [Customer Relationship Management, Human Capital Management, Enterprise Resourc

Software as a Service Market Assessment, By Deployment Model [Public Cloud Hosting, Private Cloud Hosting, Hybrid Cloud Hosting], By Component [Software, Service], By Use Case [Customer Relationship Management, Human Capital Management, Enterprise Resource Planning, BI & Analytics, Content, Collaboration & Communication, Others], By User Type [Business to Business, Business to Customer], By Industry Vertical [IT & Telecom, Banking, Financial Services & Insurance, Healthcare, Retail & Consumer Goods, Manufacturing, Education, Travel & Hospitality, Others], By Region, Opportunities and Forecast, 2017-2031F

Global software as a service market is projected to witness a CAGR of 18.45% during the forecast period 2024-2031, growing from USD 208.1 billion in 2023 to USD 806.4 billion in 2031F. The cloud computing world is advancing towards work-from-home (WFH) jobs, fueling the demand for the software as a service market at the global level. Software-as-a-service has low entry barriers and witnesses an upsurge in demand due to its scalability and flexibility. Subscription-based models are gaining traction since they offer convenience, personalization, and sustainability. Furthermore, businesses can attract recurring revenue by encouraging customer success and improving buyers’ retention. The recent digitalization trend also promotes global software as a service market growth. Furthermore, integrating artificial intelligence and machine learning results in businesses elevating their business opportunity to the next level by providing custom SaaS tools. Henceforth, the changing work trends and tech evolution fuel rapid software as a service market expansion at the global level.

The subscription-based model has been gaining traction in recent years as renting is more affordable for end-users to avail themselves of solutions by major market players such as Adobe, Salesforce, Dropbox, and others. The major advantage of SaaS provided as a subscription model is that it offers businesses the ability to generate predictable and recurring revenue streams across various sectors. Furthermore, businesses are providing curated options in subscription models specially designed to target customer segments to capture a large portion of global software as a service market share.

For instance, in August 2023, Paddle, a payments infrastructure provider for SaaS firms, launched Paddle Billing, a collection of APIs and services designed to improve billing capabilities. It also enhances Paddle's basic Merchant of Record (MoR) business. It enables hybrid billing, allowing SaaS firms to charge subscriptions using an invoice and a credit card, providing a consistent client experience.

Integration with Artificial Intelligence Contributing to Global Software as a Service Market Growth

Implementing artificial intelligence in the software as a service market is a significant technological advancement fueling the growth in the industry as it offers predictive analytics, automates routine tasks, and provides intelligent insights improving the overall efficiency of businesses and revolutionizing the traditional way of operations. Artificial intelligence is integrated along with machine learning to analyze big data to make better predictions and enhance decision-making capabilities. Machine learning is used by Einstein AI, which Salesforce developed to help sales representatives identify potential leads and make customized recommendations and insights. Artificial intelligence is also used in SaaS through natural language processing (NLP) technology. NLP technology is used to comprehend and interpret human language, such as an AI-powered virtual assistant by Microsoft’s Cortana, which can schedule meetings, send emails, and provide reminders.

For instance, in February 2024, Siemens released Senseye Predictive Maintenance, a new generative AI functionality in its prediction maintenance solution. This development was introduced to make predictive maintenance more understandable and conversational. This new generative AI feature in the Software-as-a-Service solution combines generative AI with machine learning to build a strong, complete predictive maintenance solution that utilizes both technologies’ capabilities.

Mobile-First SaaS and Vertical SaaS Solutions to Boost Global Software as a Service Market Demand

The software as a service market is witnessing a rapid drift towards mobile-first solutions with the rising number of mobile devices. SaaS companies are emphasizing creating more applications specially designed for mobile devices. Reliance on smartphones and tablets for company operations is also experiencing growth with the increasing need for seamless mobile access to SaaS solutions, contributing to the global software as a service market size. Apart from this, vertical SaaS developers are focusing on software tailored to the needs and workflows of specific industries. Industry-specific knowledge provides a better understanding of a certain industry’s difficulties that allows the trend to design customized solutions to cater to the pain points of that specific industry. Vertical SaaS emphasizes the benefits of the businesses in the field from the level of customization and industry expertise, as it allows businesses to employ software designed specifically for their operations.

For instance, in September 2023, Mobly, a mobile software company, unveiled its latest application for B2B enterprises which focuses on enhancing lead collection speed and accuracy. Mobly allows searching for contacts by name and company and scans a badge or business card at any event by the use of AI-powered optical character recognition (OCR). It also enhances the lead information and seamlessly synchronizes the profiles and activity data with CRM or any marketing automation platform, shortening the time for a qualified lead. A process that used to take firms days or weeks can now be completed in seconds. The Mobly app is now accessible for Apple iOS and Google Android users.

North America Holds a Significant Share of the Market

North America is the most prominent region contributing to the growth of the global software as a service market share. The main factor behind the continuous growth of the market is the rapid shift in remote and hybrid work culture accelerated after the COVID-19 outbreak. This remote culture developed the demand for SaaS products to cater to the needs of the industries to manage remote teams and keep operations running smoothly and efficiently. Another factor was the necessity of better digital collaboration tools which enabled managers and employees to engage in proper communication to improve the workflow of the operations internally and externally. Furthermore, SaaS adoption became more prevalent in industries such as BFSI, manufacturing, and retail sectors as the era of digitalization across diverse sectors.

BFSI Sector Fostering Revenue in Global Software as a Service Market Share

SaaS is utilized in the BFSI sector since it offers superior flexibility to scale up or down depending upon the demand, thereby enabling the BFSI companies to efficiently add or remove features, users, and modules as required. The scalability achievement due to the utilization of SaaS in the BFSI sector results in the organizations staying competitive and agile in rapidly changing market dynamics. Thus, due to the above-mentioned benefits the deployment of SaaS is increasing in the BFSI sector. Furthermore, the integration of AI services with SaaS is also fostering the deployment of SaaS in the banking sector.

For instance, in April 2024, Oracle Corp. unveiled Oracle Financial Services Compliance Agent which is an artificial intelligence-powered cloud solution designed to assist the banking sector in combating anti-money laundering (AML) and the remaining compliant more efficiently. The tool allows institutions to conduct low-cost hypothetical scenario testing, alter thresholds and restrictions, and detect fraudulent actions. Compliance agents may evaluate the threat profile of new financial products, proactively analyze and reduce risks associated with vulnerable typologies, and make more cost-effective, quicker, and evidence-based risk modeling choices.

Future Market Scenario (2024–2031F)

According to the global software as a service market analysis, advancement in the field of artificial intelligence will attract more demand in the software as a service market as AI capabilities offer businesses to gain better values from their data, help to automate and customize services to cater specific industry needs, enhance the security level, and supplement human capacity. Along with automation in the software as a service market, businesses may rely on the automation tool to handle the misconfiguration issue and minimize data breaches and cybersecurity risks. Vertical SaaS may gain traction as it is completely customizable, targeting customers within a specific industry.

Key Players Landscape and Outlook

The global software as a service market has a presence of multiple companies dealing in the offering of software as a service resulting in new innovations in the market at the global level. Thus, the companies are launching new software as a service offer with upgraded features. This, in turn, is resulting in intense competition in the software as a service market at the global level.

For instance, in January 2024, Temenos AG, a Switzerland-based company that deals in the offering of software as a service (SaaS) launched end-to-end Temenos Enterprise Services. The new software as a service solution (SaaS) is enabling the banking sector to utilize software solutions in just 24 hours, thereby significantly minimizing modernization costs. The major focus of Temenos AG was to increase its market presence in the global software as a service market.

In February 2023, Oracle Corporation, a provider of SaaS solutions in the United States introduced Banking Cloud Services, a new offering of composable and componentized solutions for the banking industry. Banking Cloud Services is a software as a service (SaaS) solution that will offer corporate, along with retail banks, a competitive edge to modernize their banking applications to meet the customer's needs. The service innovation associated with software as a service (SaaS) will create a lucrative opportunity for the growth of the market during the projected forecast period.