How Customers are Embracing SaaS

The trend lines for the explosion of cloud-centered SaaS solutions continue to point towards staggering growth in the coming years. While enterprise level SaaS purchases are growing slowly but surely, one of the biggest stories in SaaS has been the huge increase in the number of purchases made by individual customers, independent of a larger corporate IT structure. This would seem to point to a “democratization” of the software buying world, and marks a valuable potential for SaaS providers to expand their recurring revenue lines.

SaaS Purchases on a Personal Level

Also referred to as the “Consumerization” of SaaS, this phenomenon is most clearly demonstrated when looking over the per-customer revenues of SaaS providers over the last four years. From a high of $96,000 per customer in 2011, revenues dropped to $13,000 per customer in 2014. When combined with the overall increase in SaaS revenues, this indicates an enormous shift from large enterprise clients to individuals as the primary driver of purchases. Reinforcing this trend is the fact that the average SaaS provider going public in 2014 made 77 percent less per customer than similar companies in 2011.

Silicon Angle predicts a continuation of this trend, and predicted that in the future, software purchasing decisions will continue to decentralize. There will be more purchases made by individual team leaders without the oversight and curation of company-wide IT departments and other gatekeepers.

While this can make it more time-consuming for SaaS providers to form the kind of sticky relationships that are emblematic of the recurring billing model, industry leaders predict that the overall benefit of an increase in potential for purchasing decision points can only signal good news for SaaS revenue.

Increasing Enterprise Revenues

Industry-wide revenue forecasts for a variety of SaaS and cloud-based providers continue to be positive, and data services company Box remains the poster child for enterprise level activity. With revenues of around $300 million in 2014, many analysts are predicting that the company will bring in more than $1 billion in revenues by 2019.

It’s been a long road since the start of the SaaS revolution in the mid 2000s, but with increasing purchasing activity across the size spectrum, the future of SaaS looks promising as customers continue to embrace its solutions.

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