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SaaS: Conversion of On-Premise Software to the Cloud Fuel Rapid Growth of SaaS Revenues

By Dick Weisinger

Global SaaS sales reached $15 billion in the second quarter of 2017, a 31 percent increase over the same period in 2016, according to a study by Synergy Research Group.  Microsoft is the biggest leader in this market, followed by Salesforce, Adobe, Oracle and SAP.  Synergy expects the SaaS market  to continue to grow globally and will double in size by 2020.

John Dinsdale, chief analyst and research director at Synergy Research Group, said that “infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) markets tend to get more attention and are indeed growing more rapidly, but the SaaS market is substantially bigger and will remain so for many years.”

But despite the rapid growth, SaaS is still dwarfed in comparison by traditional on-premise software, but conversion of those users to the cloud is happening rapidly, driving the growth being seen now by SaaS. Dinsdale said that “traditional enterprise software vendors like Microsoft, SAP, Oracle and IBM still have a huge base of on-premise software customers and they are all now pushing to aggressively convert those customers to a SaaS-based consumption model. At the same time, born-in-the-cloud software vendors like Workday, Zendesk and ServiceNow continue to light a fire under the market and help to propel enterprise spending on SaaS.”

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