Services and SaaS trends

Each time PwC ranks the Global 100, we see more signs of the changes shaking up the software industry, and the tech industry as a whole. First, SaaS companies appeared on the list. Then, their revenues started to increase. Now they are steadily climbing their way up the list.

Service companies are also on the move. By 2016, IDC estimates about 25 percent of new business software purchases will be service-enabled software; SaaS delivery will constitute about 14.2 percent of all software spending and 18 percent of all applications spending. IDC’s 21.3 percent compound annual growth rate forecast for SaaS reflects the strength of the new business model.

Meanwhile, the traditional licensing model is expected to grow four percent, IDC predicts. Furthermore, PwC estimates that the traditional IT services market grew two percent from 2011 to 2012. Hardware revenues declined by 0.5%, according to PwC. Declines or slow growth in most traditional IT-related markets will lead to even more intense competition in the future.

Companies outside the tech industry are accelerating their efforts to digitise their products and services. More traditional businesses are acquiring software companies or investing in software.

But mainstream companies don’t want to just purchase a software or hardware product that they will have to integrate into their product as well as continually upgrade, maintain and support. To digitise their offering in the most efficient way possible, they need a software partner that will provide the service using the hardware as a delivery vehicle, sometimes as a loss-leader.

Top 20 SaaS vendors as percentage of revenue Top 20 SaaS vendors as percentage of revenue
Top 20 in SaaS revenues

Top 20 in SaaS revenues