Microsoft, Not Salesforce, Now Leads SaaS Market

Microsoft who was the late entrant to the cloud market will finally be known as the overall leader in the software-as-a-service (SaaS) market setting aside Salesforce, albeit by a small margin.

Microsoft had a 15 per cent share of worldwide enterprise SaaS revenues and Salesforce 14 per cent in Q2, according to Synergy Research Group. Strangely, Salesforce doesn’t even rank in all the different aspects of SaaS. It holds the dominant position in customer relationship management (CRM), true.

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Like a lot of large companies, Microsoft was late to the cloud services market several years ago, but it has apparently caught up to the leaders and surpassed them, believe analysts.

Microsoft ranks number one in collaboration tools, two in CRM and three in enterprise SaaS.  What’s also interesting to notice is that the global SaaS market has also grown, hitting $11 billion in quarterly revenue.

Earlier Gartner has named Microsoft Azure “top cloud service” — for the third year in a row.

“We are, of course, thrilled and honored that Microsoft Azure named a Gartner Magic Quadrant leader for the third year in a row”, says Necip Ozyucel, Cloud and Enterprise Business Solutions lead, Microsoft Gulf, back then said ITProPortal in report.

Other leading SaaS providers include SAP, Oracle, Adobe, ADP, IBM, Workday, Intuit and Cisco. Among the top 10 companies, Oracle achieved the highest growth rate in Q2 2016, followed by Microsoft, as per the research.

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The enterprise SaaS market is relatively mature compared with other cloud markets, such as infrastructure as a service (IaaS) and platform as a service (PaaS). Nonetheless, Synergy projects that it will more than triple in size over the next five years, with strong growth across all segments and all geographic regions, Chief Analyst and Research Director John Dinsdale said in a statement.

Meanwhile the consumer SaaS market is much smaller than the enterprise market and is not growing as strongly. However, in this segment there is huge growth for Microsoft, which has more than doubled its revenues on a rolling annualized basis.

“In SaaS, a big battle is playing out between the traditional broad-based software vendors and companies that are focused on a specific application area or industry sector, many of which are entirely cloud-based,” Dinsdale said.

“It might be tempting to assume that the latter camp are leading the charge, but in fact the traditional software vendors are growing their SaaS revenues more rapidly, helped by their huge base of on-premise software customers that can be aggressively targeted for conversion to a SaaS consumption model.”

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