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According to second quarter data by Synergy Research, the enterprise SaaS (software-as-a-service) market helps software vendors to generate $20 billion quarterly revenue. This number is further growing by 32% each year.

Synergy stated that SaaS market has gained maturity in many ways, but there are still a number of factors that limit the growth of SaaS market in years to come. Currently, the SaaS market accounts for less than 15% of total enterprise software spending.

The SaaS market is not growing as faster as IaaS (infrastructure-as-a-service) and PaaS (platform-as-a-service) markets, but it is substantially bigger and will remain so with rapid growth across all segments and geographic regions.

Microsoft is currently dominating the global SaaS market, holding a market share of 17%. It overtook Salesforce in the SaaS market because of its leadership in high-growth collaboration segment.

Salesforce continues to lead the CRM segment, but its growth is relatively low in SaaS segments. Adobe, Oracle, and SAP are following Microsoft and Salesforce in SaaS market. Among Adobe, Oracle and SAP, Oracle achieved the highest growth rate.

The top five vendors in enterprise SaaS market account for more than 50% of the market. The next ten vendors account for another 26% of the market, where ServiceNow, Google, ADP and Workday witnessed the highest growth rate.

“There is a fascinating battle for SaaS playing out, with traditional enterprise software vendors slugging it out with born-in-the-cloud vendors like Workday, Zendesk, ServiceNow and Dropbox,” said John Dinsdale, a Chief Analyst at Synergy Research Group.

“The latter group are helping to rapidly transform the market, but the more traditional players like Microsoft, SAP, Oracle and IBM still have a huge base of on-premise software customers that they can convert to a SaaS-based consumption model. Meanwhile Cisco and Google too are making ever-bigger inroads into the SaaS market, via Cisco’s collaboration apps and software vendor acquisitions and Google’s G Suite.”

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Synergy noted that SaaS market remained quite fragmented, with different vendors leading each of the main market segments.

Image source: Synergy Research