Until recently, Software as a Service (SaaS) was rapidly expanding across the globe as new companies realize the novel ways they can scale their business with SaaS tools. The SaaS industry recently shifted to more of a holding position focused on sustainability rather than growth, considering the current economic climate that isn’t as hospitable to rapid growth.
While North America currently dominates the SaaS market share of both companies and customers, the global market is projected to grow rapidly over the next decade.
8. The global SaaS market will grow 349% through the decade.1
9. The North American SaaS market represented 48% of the global market share in 2023, at $131.18 billion.1
10. The revenue share for software (compared to services) accounts for more than 84% of the SaaS market.6
11. The U.S. has the largest SaaS market share among all countries, with over 17,000 companies.7
12. Microsoft is one of the largest SaaS companies in the world, with $2.3 trillion in market capitalization as of 2023.8
13. From 2024 to 2032, the expected compound annual growth rate (CAGR) for the global SaaS market is 18.4%.1
14. The Asia Pacific SaaS market is expected to be the fastest-growing region in the next decade, with a CAGR of 22%.9
15. Experts predict that, by 2028, more than 50% of enterprise businesses will rely on industry cloud platforms.5
16. A 2024 survey revealed that 60% of businesses are budgeting to spend more on software this year.2
17. The median growth rate for public SaaS companies as of October March 2023 is 35%.10
18. Among equity-backed SaaS companies, the median growth rate as of October 2023 is 35%, while bootstrapped organizations report a 32% median growth rate.10
19. As of October 2023, B2B private SaaS companies with annual recurring revenue (ARR) of less than $1 million reported the highest median growth rate at 50%.10
20. The largest B2B private SaaS companies with ARR of over $20 million had the lowest median growth rate as of October 2023, at 27%.10
SaaS is the biggest expenditure for businesses’ cloud services. In light of slowed market growth, businesses are being prudent about adjusting pricing structures and managing SaaS spending.
SaaS tools are the largest spend area when it comes to businesses' cloud services and therefore an area many companies are looking to reduce. In light of this, SaaS providers will need to guard their revenue carefully.
Strategies for generating SaaS revenue are transforming. These statistics explore SaaS revenue for both public and private companies, with a close look at customer acquisition, market segmentation, and growth trajectories.
21. The average CAGR for SaaS companies dropped to 8.4% in September 2023, a dramatic drop from the 60% CAGR in the first quarter of 2022.11
22. The European SaaS Market is projected to bring in $69.82 billion in revenue in 2024.12
23. Large enterprises that employ more than 1,000 people accounted for over 60% of global revenue in the SaaS market in 2022.6
24. Private cloud companies accounted for 43% of global SaaS revenue in 2022, the largest market share among SaaS market segments.6
25. Public SaaS companies have an average of 36,000 customers.13
26. Private SaaS companies' median net revenue retention rate is 102%.14
27. There are 836 software companies with valuations greater than $1 billion.15
28. The median ARR per employee for private SaaS firms in 2023 was $112,500.16
29. Enterprise SaaS companies with more than $20 million ARR have the highest median ARR per employee at $183,932.16
30. SaaS companies with less than $1 million ARR have the lowest median ARR per employee at $55,183.16
SaaS pricing strategies are a critical battleground for customer acquisition and retention. By analyzing trends in transparency, discounts, and the rise of value-based models, we get a glimpse into how SaaS businesses are balancing customer needs with their own revenue goals.
31. A survey from OpenView Venture Capital found that 39% of SaaS organizations utilize a value-based pricing model to take advantage of the solution flexibility SaaS offers. Meanwhile, 24% copy their competitors’ prices.17
32. There is almost an even split between companies that choose to publish their pricing structure (45%) vs. those that do not (55%).17
33. 68% of surveyed SaaS companies discount their prices in fewer than one-quarter of all deals, and 29% admit to “very little discounting” from their sales teams.17
34. Between August 2022 and August 2023, 73% of SaaS providers raised prices by 12% on average.18
At one time, SaaS was considered a novel way to save money in the IT department. Now companies are realizing that SaaS can change their entire workflow, doing much more than just saving them money. At the same time, the number of SaaS providers grew significantly.
Naturally, there’s overlap between some SaaS applications. While companies are adopting new technologies, they’re also looking to cut redundancies and reevaluate their SaaS spending across the board, given the current economic environment.
Churn is a key SaaS KPI because even though companies often ask for the reasoning behind a customer leaving, churn is still especially hard to predict. Reducing churn can be tough without knowing where it comes from.
Let’s examine some statistics around SaaS adoption and current churn rates.
35. SaaS purchases are overseen by a team of five people, on average, and 44% say their finance team is a part of the process most of the time.2
36. The average annual churn rate for SaaS companies is between 5-7%.19
37. In a 2022 survey, 54% of respondents said that company leaders and decision-makers changed their views on technology after the COVID-19 pandemic, leading to new adoptions of SaaS software.20
38. Companies used an average of 371 SaaS apps in 2023, an increase of 32% over 2021.21
39. The growth rate of SaaS apps slowed slightly in 2022, as 40% of IT professionals combined redundant applications.4
40. Three out of four IT professionals surveyed say they want SaaS solutions capable of insights-driven automation.4
41. In a 2022 survey, 50% of respondents said they plan to increase the number of cloud providers they use in the next two years.22
42. In a 2022 survey, 29% of respondents indicated that they would change at least one of their cloud providers in the coming two years.22
SaaS businesses face significant and often shifting challenges, like the unpredictable nature of venture capital funding. Company and user security, workforce management, and revenue planning are three primary pain points in the SaaS world.
Let’s break down each pain point and see what potential solutions SaaS companies can take to mitigate these challenges.
With costs and economic projections constantly changing, companies face steep challenges in planning revenue allotment for the future. And company by company, costs associated with R&D, selling, marketing, customer support, and general administration always fluctuate.
SaaS predominantly works on recurring revenue, making it easier to predict revenue in the short term. However, challenges appear with the uncertainty of whether customers will renew their contracts.
Let’s review some important statistics about how companies spend their revenue.
43. Venture capital funding for tech startups decreased 37% year over year from 2022 to 2023.23
44. Businesses surveyed find financial data is more than 3x more influential than customer data in influencing decisions, which included SaaS companies.3
45. Sales data only has half the influence of financial data in decision-making according to businesses that Vena surveyed, of which 13% were SaaS firms.3
46. In a 2022 survey of business leaders and finance professionals across industries including SaaS, 39% said their businesses don’t practice agile planning to prepare for the future.3
47. 41% of respondents, including those from SaaS businesses and firms in other industries, said they weren’t drawing on organizational data to influence decision-making, and even more disregarded sales, employee, and customer data for the same purposes.3
48. 55% of survey respondents, including SaaS businesses as well as other companies, said their organizations don’t adjust forecasts based on updated information.3
49. 60% of respondents noted that finance decision-makers don’t have a seat at the table for strategic planning discussions, and only 28% said they have the final say in those decisions.3
50. The median spend of ARR on research and development costs is 24%, the highest revenue spending.24
51. Median costs as a portion of ARR other than R&D include selling (16%), administration (15%), customer success and support (11%), and marketing (10%).24
52. Equity-backed SaaS companies, on average, spend
70% more on administrative costs, 61% more on research and development, and 44% more on marketing than bootstrapped ones.24
Despite the challenges with revenue planning, there are concrete solutions that businesses can embrace to create better forecasts and budgets:
SaaS companies manage sensitive data in almost every application. This makes them targets for nefarious actors who want to damage or steal that information.
A lack of knowledge and resources about using SaaS software often leads to problems like SaaS misconfigurations that lead to vulnerabilities. Those vulnerabilities can lead to potential reputational damage for SaaS firms stemming from mishandled security incidents.
Here are the top SaaS security statistics shaping how companies think about software safety.
53. SaaS misconfigurations cause as many as 63% of organizational security problems.25
54. 43% of organizations surveyed can tie at least one security issue to a SaaS misconfiguration.25
55. According to 35% of companies who responded, the main issue with SaaS misconfigurations is too many parties with credentials to change SaaS security settings.25
56. 46% of organizations surveyed only have the bandwidth for monthly or more infrequent checks for SaaS misconfigurations, and 5% never check for them.25
57. Geopolitical issues are expected to lead to an increase in defaults of SaaS contract commitments, directly affecting over 50% of subscribers.26
58. In the last year, 43% of IT professionals surveyed implemented a SaaS app that stores sensitive information.4
59. 42% of IT professionals surveyed have trouble securing SaaS user activities.4
60. In a 2022 survey, 59% of respondents reported that offboarding employees was a top SaaS concern.20
61. Former employees from 31% of companies have accessed company assets stored in SaaS applications after they have left the company.27
62. Insider threats where former employees still have access to SaaS apps account for 22% of security problems.28
What can lessen the risk for companies that know they need SaaS to achieve and expand on their targets?
Companies should consider the following priorities when strengthening their SaaS best practices:
One of the biggest struggles SaaS companies encounter is workforce planning. Staffing is a large spend for SaaS companies, but this comes with its own challenges. The challenges start to rear their ugly heads when you take into account the 262,735 tech layoffs that occurred in 2023, a 59% increase over the 2022 total.
Companies worry about hiring the right balance of employees as well as straddling the line between hiring for growth and prioritizing operational efficiencies. How do you tackle this challenge when the workplace is only getting more adaptive to new technologies, not less?
There are a few ways companies can streamline workforce planning and management to meet this task:
Since the early days of Salesforce’s first CRM in 1999, the SaaS industry has continued to evolve and transform the way businesses run. Now, cutting-edge advancements lead the way as priorities shift to creating seamless connections and adapting to a mobile-first world.
Recent news has shown a surge in investments in AI ventures, projected growth for AI-powered features, and the exciting potential of AI to streamline processes and ensure compliance.
63. The global Artificial Intelligence Software market reached $16.98 billion in 2024 and is projected to reach $80.6 billion in 2031, with a CAGR of 29.64%.29
64. Private investments in AI ventures are anticipated to grow to $200 billion globally and $100 billion in the U.S. by 2025.30
65. Revenue from AI data services for Machine Learning Operations tools is projected to almost quadruple between 2024 and 2028.31
66. Experts predict that, by 2028, generative AI will lead to a 30% drop in the risk of noncompliance in software and cloud contracts.26
In today's software landscape, seamless connections are critical to building a successful business. SaaS integrations have climbed the priority list for both software providers and their customers, but some obstacles remain.
67. More than 4 out of 5 tech companies cite integrations are “very important” or a “key requirement” for their customers.32
68. Global buyers rank integrations as #3 on their list of priorities when evaluating new software, behind security (#1) and ease of use (#2).33
69. 39% of buyers identified integration with currently owned software as the most important factor when choosing a software provider.33
70. Two out of five B2B professionals feel that integrating a new CRM into their existing systems is a major roadblock to implementation.34
Mobile devices dominate the tech landscape, both at the B2C and B2B levels. Ensuring your SaaS company’s offerings are optimized for mobile is a necessity for obtaining and maintaining customers.
71. By the end of Q4 2023, mobile devices accounted for 58.67% of the world’s website traffic.35
72. Many countries experience a significant percentage of web traffic coming through mobile, such as Nigeria at 86.67% and Vietnam at 86.51%. In comparison, the U.K. comes in at 48.71% and the U.S. at 44.25%.36
73. A one-second delay in page load time among mobile session traffic can result in a 26% drop in conversions.37
74. 50.48% of conversions occur through mobile devices, while 49.52% still rely on desktop.38
Even in a down market, the future is bigger and brighter for companies that know what to do with their data. More companies are adopting SaaS tools for better financial planning as they realize what benefits the tools have for their employees, time, and profits.
A comprehensive and collaborative FP&A tool like Vena can revitalize your workflow and help you make more informed, efficient, and effective decisions.
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