As they primarily “operate behind the scenes,” we often underestimate the importance of SaaS applications. Yet, the software-as-a-service model is the platform most companies rely on, and this market shows no signs of slowing down.
So, to better understand the SaaS world, here are the essential SaaS statistics and facts for 2023 and beyond. These figures should paint a clearer picture and outline the problems SaaS companies face during these turbulent times.
Top Ten SaaS Statistics
The global SaaS market value could reach $344.3 billion by 2028.
The SaaS market could grow at a CAGR of 27.5% by 2028.
In 2021, the software-as-a-service industry was worth approximately $146 billion.
The median value of the top 50 SaaS companies grew by 179% in 2020.
In 2022, Apple was the highest-valued global SaaS provider.
15% of organizations have experienced unauthorized data access with their SaaS provider.
15% of employees transfer business-sensitive data to their private cloud accounts
In 2022, more than 43% of organizations experienced security incidents because of SaaS misconfigurations.
78% of SaaS companies offer free plans or free trials.
44% of B2B SaaS companies use the sales-negotiated pricing model.
The Latest SaaS Industry Statistics
The global SaaS market value could reach $344.3 billion by 2028.
After the spike in demand triggered by the pandemic, the software-as-a-service industry reached an impressive market capitalization of approximately $165.9 billion in 2021. Experts predict a bright future for the SaaS market, and the growth should continue despite inflation and the economic crisis.
More precisely, the global software-as-a-service industry could see an 11% compound annual growth rate (CAGR) from 2022 to 2028.
(Grand View Research)
The SaaS market could grow at a CAGR of 27.5% by 2028.
The booming SaaS industry is expanding continuously, even though the COVID-19 pandemic caused unseen growth that has slowed down recently.
For instance, Fortune Business estimated the market’s value at approximately $130 billion in 2021. With a 27.5% growth rate, the industry could reach $716.5 billion within the next five years.
(Fortune Business Insights)
By 2024, the global software-as-a-service market could grow to $185.8 billion.
Businesses worldwide benefit from software-as-a-service technology and this symbiosis fuels growth in the SaaS market. For example, experts from PR Newswire predict a 21.4% SaaS growth rate for 2023.
Namely, the Asia Pacific market could see a CAGR of 22.3% by 2024, while the forecasts for the European market estimate an 18.8% compound annual growth rate.
(PR Newswire)
By 2027, the global service-as-a-software market could reach $571.9 billion.
Another forecast that estimates a CAGR of around 20% comes from BCC, with a conclusion that the SaaS market could exceed the $500 billion mark by 2027.
So, the projections follow a similar pattern, sharing the belief that the overall SaaS growth for the next four or five years is inevitable and expressed in double digits.
(BCC Research)
In 2021, the software-as-a-service industry was worth approximately $146 billion.
Many industries suffered during the pandemic, but the SaaS market exploded, with many companies earning record-breaking revenues. In other words, many SaaS providers benefited from the increased demand for effective cloud solutions during lockdowns.
Thus, the overall SaaS market size skyrocketed, reaching approximately $146 billion in 2021. Similarly, according to Statista, the industry could grow to $195 billion by 2023.
(Statista)
The median value of the top 50 SaaS companies grew by 179% in 2020.
The explosive growth in the software-as-a-service industry during 2020 skyrocketed the market valuations of the most significant public SaaS companies. More precisely, the value of the top 10 companies broke the $1 trillion mark for the first time.
For instance, Zoom, one of the biggest SaaS companies, had a growth rate of a whopping 420%, adding approximately $88 billion to its market valuation. Similarly, Shopify grew by 208%, increasing its value to $108 billion.
(Mike Sonders)
The United States had around 17,000 software-as-a-service companies in 2022.
In 2022, the USA had more SaaS businesses than all the other countries on the top ten SaaS list combined. But, of course, American companies operate globally, and these 17 thousand software-as-a-service enterprises served around 59 billion customers worldwide in 2022.
According to the same SaaS market statistics, the UK took second place in 2022 with approximately 2,000 software-as-a-service companies and 3 billion customers.
(Statista)
In 2022, Apple was the highest-valued global SaaS provider.
Besides having the highest number of SaaS businesses, the United States has the most successful ones. For instance, data from April 2022 reveals that the highest-valued public SaaS enterprise was Apple, with $2.9 trillion in market capitalization.
Similarly, the second and third spots on the list went to American tech giants Microsoft and Alphabet, with $2.3 and $1.9 trillion in market value, respectively.
(Statista)
Global SaaS Adoption Statistics
By 2025, 85% of business applications will be SaaS-based.
Software-as-a-service applications are at the forefront of digital transformation, with many businesses adopting this distribution model. As we said, the COVID-19 pandemic triggered unprecedented growth in the SaaS sector.
So, it’s not surprising that experts predict further adoption of off-premise solutions in business infrastructure. For instance, the number of SaaS apps in IT could increase tenfold between 2015 and 2025.
(BetterCloud)
By the end of 2023, worldwide user spending on cloud services could reach $591.8 billion.
SaaS applications are, by definition, cloud-based, making them agile, scalable, and available to millions of users worldwide. Thus, the increase in spending on public cloud services often spells good news for software-as-a-service businesses.
For instance, Gartner forecasted an 18.8% growth rate for end-user spending on cloud services in 2022, but the predictions for 2023 estimate a 20.7% growth.
(Gartner)
In 2022, the global cloud computing platform market was valued at $545.8 billion.
Cloud computing comprises multiple elements and offers various resources to end-users, including storage, databases, and networking through pay-as-you-go pricing models. In a way, the growth of SaaS equals the growth of cloud computing.
According to the latest estimates, the cloud computing platform market could grow by $1.2 trillion by 2027.
(MarketsandMarkets)
The SaaS segment in the global cloud computing industry could grow by 17.6% over the next five years.
Although Infrastructure-as-a-service platforms could see a higher CAGR (22.5%) than Software-as-a-service technologies, the growth of SaaS systems seems inevitable and ever-increasing.
Cloud computing allows businesses to optimize costs and reduce capital expenditure, allowing the largest SaaS companies to grab the opportunity and harvest jaw-dropping revenue.
(MarketsandMarkets)
Large-scale corporations host only 10 to 15% of their applications in the cloud.
Despite the increasing adoption, SaaS technology and cloud-based platforms still have a long way to go to become mainstream. For example, McKinsey reports that only 14% of companies investing in digital transformations see sustained performance improvements.
As expected, the secret lies in outdated technologies that stifle the adoption of cloud-based solutions and software-as-a-service applications. Security issues are also present, so let’s dive into these aspects next.
(McKinsey)
The Latest Stats on SaaS Security
Worldwide spending on risk management and information security grew by 6.4% in 2020.
Besides the benefits, each new technology introduces challenges and problems, and software-as-a-service is no exception. In other words, organizations grapple with regulatory demands and safety issues on public cloud platforms.
That’s why worldwide spending on these elements reached $150.4 billion in 2021, growing at 12.4% year-over-year compared to 2020.
(Gartner)
15% of organizations have experienced unauthorized data access with their SaaS provider.
As far as SaaS trends go, nothing beats the importance of investing in data security and risk management. After all, one-in-five organizations have experienced breaches or data loss with their SaaS provider.
As a result, 20% of organizations decided to repatriate a portion of their application workloads from public clouds to on-premise solutions or private clouds.
(IDC)
69% of tech executives admit “shadow IT” is the primary safety concern regarding SaaS services.
Shadow or Informal IT happens when employees use cloud services and other software without the IT department’s authorization.
Nevertheless, 94% of respondents in the same study are optimistic about SaaS adoption, expecting to increase the number of SaaS tools in the next two years. More precisely, 64% plan to deploy SaaS management tools.
(Torii HQ)
15% of employees transfer business-sensitive data to their private cloud accounts.
The software-as-a-service technology is still relatively new, and many employees don’t have the necessary SaaS etiquette to use public cloud-based platforms. Given that 20% of employees have access to business-critical data, raising awareness and improving SaaS safety protocols is essential.
More worryingly, the latest SaaS trends reveal that one-in-four identities in SaaS environments are non-human, i.e., serverless applications, APIs, and virtual machines have access to the platforms.
(Varonis)
56% of users say that the lack of visibility into the SaaS stack core is their primary security concern.
In a 2022 study, only 32% of respondents admitted they felt worried about the lack of SaaS security.
On the other hand, SaaS stats show that more than half of respondents said lack of visibility and access to the care settings was the main problem with software-as-a-service applications.
(Statista)
In 2022, more than 43% of organizations experienced security incidents because of SaaS misconfigurations.
The top security concern for many organizations is SaaS misconfigurations, and up to 63% of companies have no data about the potential incidents caused by their SaaS usage.
In any case, the leading causes of SaaS-related issues include too many departments with access to SaaS and disrupted visibility into the changes in security settings.
(Cloud Security Alliance)
In 2022, 81% of organizations increased their investments in business-related SaaS tools.
The best way for organizations to reduce or prevent SaaS security incidents is to raise defenses, so, understandably, many enterprises spend more on data protection, education, and safety protocols.
Namely,73% of organizations that invested in SaaS security spent money on improving safety tools, while 55% invested in educating staff about software-as-a-service.
(Cloud Security Alliance)
SaaS Industry Trends for 2023 and Beyond
78% of SaaS companies offer free plans or free trials.
Most software-as-a-service companies adopted product-led growth (PGL) strategies, with 48% of organizations offering an always-free program for single users or smaller teams. On the other hand, only 26% of companies encourage users to start with a free plan.
In addition, studies reveal that 22% of businesses use “Get started” as the call-to-action button for medium tiers and “Contact Sales” for the enterprise level.
(FastSpring)
44% of B2B SaaS companies use the sales-negotiated pricing model.
Sales-negotiated pricing is among the top SaaS trends in 2023, especially in the B2B community. Namely, only 34% of companies use fixed pricing, while 24% opt for variable pricing models.
Nevertheless, 64% of participants in a recent SaaS-related study said they plan to experiment with new pricing models.
(SaaSOptics)
In 2021, top-performing cloud companies saw internal rates of return much higher than 100%.
The IRR, or the internal rate of return, is an essential metric in capital budgeting and financial analysis applicable to SaaS markets, among many other industries. The IRR illustrates the returns for every dollar invested into sales and marketing.
So, thanks to the emerging cloud marketplaces, many software-as-a-service organizations saw massive revenues in 2021. For instance, 45% of the top 100 cloud companies were actively selling on cloud marketplaces in 2021.
(BVP)
In 2021, medium-sized SaaS companies increased their employee ranks by 195%.
After the pandemic, many cloud-based organizations entered a hiring frenzy, with many doubling their ranks. Of course, the rush to drive growth powered this process.
The hiring slowed in 2022, but many larger SaaS companies with ARR of $5 to $15 million announced plans to add headcount.
(Localogy)
The Bottom Line
The recent SaaS statistics show that even the global crisis cannot stop the widespread adoption of software-as-a-service solutions. Large-scale corporations and small businesses benefit from using advanced SaaS applications, fueling the industry’s growth and attracting future investments.
Of course, the market is not immune to turbulence, but most experts agree that the future is bright for the global SaaS community and cloud-based solutions. So, if you plan to invest in a SaaS company, now is the time.
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