Industry Size and Growth Stats

Software-as-a-service (SaaS) is a model for the distribution of software where customers access software over the Internet. In SaaS, a service provider hosts the application at its data center and a customer accesses it via a standard web browser. SaaS removes the need to install applications on computers or in data centers, which eliminates the cost of hardware acquisition and maintenance as well as software installation and support.  In SaaS, the user does not pay for the software itself. Instead, it works as a subscription model where the user has authorization to use it for a period of time and pay for the software that they are using.

Cloud computing has not only made it more cost effective for organizations to buy software but has also made it more cost effective to produce which has resulted in countless SaaS offerings on the market today. Gartner estimates the Software-as-a-Service (SaaS) industry is now worth more than $85 billion and is expected to reach in excess of $130 billion by 2020.

Let’s take a look at some recent trends driving this industry growth.

Vertical SaaS

Horizontal SaaS products serve the needs of particular departments or functions, but are not designed to be industry-specific. Vertical SaaS products, on the other hand, are built with the needs of a particular industry in mind. Vertical SaaS solutions focus in on one particular industry. These types of solutions might feature similar tools that horizontal platforms offer, but tailored to be industry specific. For this reason, vertical SaaS providers are beating out larger horizontal SaaS competitors in new deals due to their specialized feature set and faster user adoption.

AI and Machine Learning

Artificial intelligence maybe the biggest commercial opportunity for companies, industries, and nations over the next few decades, according to a recent report from PwC. The use of AI will increase global GDP by up to 14% between now and 2030, the equivalent of an additional $15.7 trillion contribution to the world’s economy.


Many of the more common functional spaces are dominated by ten or fewer large SaaS providers (Salesforce and CRM). As a result, many emerging SaaS products will be “micro-SaaS” or smaller tools that provide one important function and are run by a smaller team, rather than large platforms. They may come in the form of add-ons, extensions, or accessories to other tools and platforms. This includes plugins and extensions for platforms like Salesforce, WordPress or Instagram. There is a huge opportunity for tools like these in niche areas of the SaaS market. They can be deployed faster and managed and grown with few people and overhead.

Mobile First Approach

The continued trend toward the mobilization of virtually everything is fast converging which will continue to fuel Mobile-SaaS opportunities focused on critical mobile applications that maximize employee productivity and business growth. The size of the corporate mobile SaaS market is anticipated to grow to $7.4 billion by 2021 according to Strategy Analytics.