SaaS adoption has dramatically transformed the workplace. The apps we use have become one of the most personal parts of our jobs. This trend might have started with marketing teams pulling away from IT to make their own software decisions, but It turns out every team wants the freedom to choose the SaaS tools that work best for them. While SaaS has been growing at an insane rate over the last decade, our latest analysis predicts that SaaS spend is still a rocket ship.
As a SaaS management platform, we provide real-time visibility into SaaS app usage and spend across the entire organization. This gives us an incredible perspective on the impact of SaaS proliferation on organizations of all sizes and on a quarterly basis we analyze more than eight years of data across a sample of hundreds of companies of all sizes. In our latest report we came away with three incredible key take-aways:
- (Company) size doesn’t matter. Everyone loves SaaS. 😍
- Free apps are more popular than ever. 🙌
- SaaS proliferation is increasing. If you don’t have chaos now, you might by 2020. 👀
Everyone loves SaaS
SaaS growth isn’t limited to technical teams like engineering, or marketing – every team is building a SaaS stack. In fact, with individuals from all departments taking on responsibility of SaaS vendor selection and implementation companies are having to rethink IT to manage these growing SaaS stacks across the org. While different departments are growing at different rates, they are all growing like crazy.
Company size doesn’t seem to matter, either. With SaaS growth for companies of 15 employees roughly the same as companies with 1000 employees.
SaaS Spending will double by 2020
While the number of SaaS subscriptions per company are expected to increase by 95% over the next two years, the average medium size company spends $20,000 a month on SaaS subscriptions, a $5,000 a month increase since Q1 2017. Based on our projections, SaaS spend across companies of all sizes will rise even more aggressively – increasing 118% by 2020.
This growth is going to put even more pressure on every company to develop a SaaS management strategy. Every team may know which apps will make them more productive, not everyone is well versed in the security, compliance, employee management, and cost concerns that come with the adoption of a new app. SaaS companies have gotten incredibly good at reducing barriers to selecting, implementing, and supporting their apps – making it easier than ever to bring new SaaS into the company.
Freemium is a strategy employed by many SaaS companies to reduce one of the key barriers to adoption – budget. We are strong believers in Freemium, but were blown away to find that on average, companies (of all sizes) are using 3x more free apps than paid apps. 😱 Despite the debate about it’s effectiveness for B2B, Freemium is clearly still an winning user acquisition strategy for SaaS companies. The best apps have figured out how to be super sticky and find upgrade paths based on value over time. This isn’t limited to a single team or function. Our trends data reveals areas of opportunity for SaaS vendors when it comes to the types of technologies companies adopt most often at various stages of growth, and which departments are seeing the most growth.
Just take a look at the Top 10 SaaS vendors by market share and with 7 of the top 10 employing freemium, it clearly works.
The good news for users is that SaaS competition isn’t slowing down – the number of SaaS apps has increased 42% since Q1 2017. Each quarter, new apps climb our leaderboards for top apps by market share, revenue, and fastest-growing apps by growth rate. If there is an activity in your day that is still highly manual, or that you’re tracking in a spreadsheet – there is probably a SaaS provider ready to help.