Report: Microsoft a trailblazer over the past decade for software services

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Microsoft has been a software leader over the past decade, according to Synergy Research Group. (Pixabay)

Microsoft has been far and away the software market leader over the past decade, according to Synergy Research Group (SRG).

Microsoft's total software revenues have doubled over the past 10 years to more than $100 billion while its software-as-a-service (SaaS) revenues have gone from zero to more than $20 billion over the same time frame, according to SRG.

Enterprises are in the process of moving from hardware-based applications and services to SaaS applications that are enabled or born in the cloud in the cloud. SaaS applications can be accessed from virtually anywhere by enterprise employees. SaaS also provides service flexibility, improved application performance and a better user experience.

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In particular, Microsoft Office 365, along with Salesforce, has proved to be a must-have application for enterprises that are accessing their data and workloads in the cloud. Unlike Salesforce, Microsoft has the advantage of using its global network of 120 points-of-presence to help provision its software services closer to users.

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SRG is taking a look back at technology trends from 2009 to 2019. It found that SaaS revenues now exceed $100 billion, having grown by an average of 39% per year over the past 10 years. On the other hand, revenues from on-premise, perpetual license software grew by an average of 4% over the past decade.

Overall, the total enterprise software market was closing in on the $450 billion mark last year with SaaS pulling in 23% of that total after growing from less than 2% in 2009.

Based on actual spending in the first three quarters of last year and its forecast for the fourth quarter, Synergy projects that the 2019 worldwide market for enterprise software will be more than $445 billion with the SaaS accounting for $101 billion.

While SaaS had the biggest bang across all of the major software application areas, the largest SaaS segments were collaboration, customer relationship management (CRM) and human capital management (HCM), with collaboration and HCM having the highest growth rates. While enterprise resource planning (ERP) is one of the larger segments in the enterprise software market, SaaS is still relatively under-penetrated in that segment, according to SRG.

“Buying SaaS versions of software has become ever more attractive to enterprises throughout the last decade, thanks to dramatic improvements in hosting capabilities, more flexible economics and increased comfort in moving to a cloud-based operational model,” said SRG's John Dinsdale, chief analyst, in a statement. "The entrance into the market of new born-in-the-cloud software vendors has also provided a major boost to the SaaS market.

"In the early days Salesforce was very much the poster child for SaaS, but over the last 10 years we’ve also seen many new SaaS vendors enter the market, including Workday, Zendesk, ServiceNow, Atlassian, Splunk, Cloudera, Carbonite and Tableau. These new entrants have caused the traditional software vendors to push SaaS more strongly than they might otherwise have done.”

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