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Posts from the ‘SaaS Forecasts’ Category

Key Take-Aways From The 2015 Pacific Crest SaaS Survey

  • Cloud Computing M&A40% of SaaS companies are using Amazon Web Services (AWS) to deliver their apps today.
  • Median subscription gross margins for SaaS companies in 2015 are 78%.
  • Overall, SaaS companies are projecting median revenue growth of 46% in 2015.
  • Channel sales and inside sales strategies delivered the highest revenue growth rates in 2014.
  • Companies in the $5M – $7.5M range achieved 70% revenue growth in 2014, surpassing the median 36% growth rate last year.

These and many other insights are from the 2015 Pacific Crest SaaS Survey published by David Skok of Matrix Partners in collaboration with Pacific Crest Securities. You can download a free copy of Part I of the study here (PDF, opt-in, 72 pp). 305 SaaS companies were interviewed, 31% from international locations and 69% from North America.  David Skok and Pacific Crest Securities will publish Part 2 of the results in the near future. SaaS Metrics 2.0 – Detailed Definitions provides a useful reference for many of the SaaS metrics mentioned in the study.

This year’s survey attracted an eclectic base of respondents, with median revenues of $4M a year, with 133 companies reporting less than $5M, and 57 over $25M. Annual Contract Value (ACV) across all respondents is $21K, with 17% of respondents reporting ACVs over $100K.  Please see pages 3 & 4 of the study for a description of the methodology. Key take-aways from the study include the following:

  • SaaS GAAP revenue growth is accelerating in 2014 and is projected to increase further in 2015 from 44% to 46%. Median revenue growth in 2014 for all survey respondents was 44%, with the aggregate projected growth for 2015 reaching 46%. When SaaS companies with less than $2.5M in revenues are excluded, median GAAP growth was 35% in 2014 and is expected to reach that same level in 2015.

grow SaaS Revenue


  • SaaS companies with mixed customer strategies are growing at 57% a year.  Excluding respondent companies with less than $2.5M in revenues, a mixed customer strategy dominates all others. Concentrating on enterprises and small & medium businesses (SMBs) both drove 33% revenue growth of respondent companies this year.

median growth rate as a function of customer


  • 40% of SaaS companies are using Amazon Web Services (AWS) to deliver their apps today. AWS is projected to increase to 44% three years from now, with Microsoft Azure increasing from 3% today to 6% in 3 years.

SaaS Delivered


  • 41% of all SaaS companies surveyed rely primarily on field sales.  Factoring out the companies with less than $2.5M in revenue, field sales accounts for 32%.

primary mode of distribution


  • Field sales dominates as the most effective sales strategy when median deal sizes are $50K or more. In contrast, inside sales dominates $5K to $15K deal sizes, and the Internet dominates deal sizes less than $1K.  The following graphic provides insights into the primary mode of sales by median initial contract size.

mode by initial contract size


  • 16% of new Average Contract Value (ACV) sales is from upsells, with the largest companies being the most effective at this selling strategy. One of the strongest catalysts of a SaaS companies’ growth is the ability to upsell customers to a higher ACV, generating significantly greater gross margin in the process. SaaS companies with revenues between $40M to $75M increase their ACV by 32% using upsells. Larger SaaS companies with over $75M in sales generate 28% additional ACV with upsell strategies.

ACV Value


  • The highest growth SaaS companies are relying on upsells to fuel higher ACV.  There is a significant difference between the highest and lowest growth SaaS companies when it comes to upsell expertise and execution.  The following graphic provides an overview by 2014 GAAP revenue category of percent of ACV attributable to upsells.

fast upsell


  • 60% are driving revenues with “Try Before You Buy” strategies, with 30% generating the majority of their revenues using this approach.  On contrast, only 30% of companies generate revenues and ACV from freemium.


The Hottest Cloud-based Marketing Startups of 2015

  • What's Hot in CRM, 2012 Apttus, Booker, Lattice Engines, Segment and Tubular Labs are the five hottest cloud-based marketing startups of 2015.
  • 13 of the hottest 34 cloud-based marketing startups are from the Bay Area, followed by Los Angeles with 3, and Bangalore and New York, both with 2.
  • 14 are in Pre Series A, 7 in A-Stage, 5 in B-Stage and 3 in C-Stage funding rounds.

These and other insights are from a quick analysis completed today using Mattermark Pro, in response to reader requests for more research on marketing startups.

Mattermark uses a combination of artificial intelligence and data quality analysis to provide insights into over 1 million private companies, over 470,000 with employee data, and over 100,000 funding events. In the interest of full disclosure I’m not today and have never done any consulting work of any kind with Mattermark.

Finding The Hottest Cloud-based Marketing Startups

To find the hottest cloud-based marketing startups, an initial query requesting startups competing in the cloud computing and marketing industries was completed. Next, advanced query tools in Mattermark Pro were used to filter out all startups that had exited as indicated by their stage status in Mattermark’s data. This filtered out startups who had been acquired, completed an IPO or had exited through other means. The table below is the result of an analysis completed today with Mattermark data.  You can download the table here in Microsoft Excel format.

hottest cloud-based marketing startups

The Mattermark Growth Score shown in the table below and downloadable Excel file is a measure of how quickly a company is gaining traction at a given point in time. It incorporates the Mindshare Score (web traffic, social traction) as well as business growth metrics (e.g. employee count over time, funding). The underlying assumption is that companies who see growth across these signals are shipping product and talking to customers, and are more likely to continue to grow as a result. This score is not meant to provide guidance on which startup to invest in.  Rather it’s a measure of momentum across the metrics and KPIs that Mattermark measures.

Businesses Adopting Big Data, Cloud & Mobility Grow 53% Faster Than Peers

  • London sykline duskOrchestrating big data, cloud and mobility strategies leads to 53% greater growth than peers not adopting these technologies.
  • 73% of midmarket companies say the complexity of their stored data requires big data analytics apps and tools to better gain insights from.
  • 41% of midmarket companies are using big data to better target marketing efforts.
  •  54% of midmarket companies’ security budgets are invested in security plans versus reacting to threats.

These and many other insights are from Dell’s second annual Global Technology Adoption Index (GTAI 2015) released last week in collaboration with TNS Research. The Global Technology Adoption Index surveyed IT and business decision makers of mid-market organizations across 11 countries, interviewing 2,900 IT and business decision makers representing businesses with 100 to 4,999 employees.

The purpose of the index is to understand how business users perceive, plan for and utilize four key technologies: cloud, mobility, security and big data. Dell released the first wave of its results this week and will be publishing several additional chapters throughout 2016. You can download Chapter 1 of the study here (PDF, no opt-in, 18 pp.).

Key take-aways from the study include the following:

  • Orchestrating big data, cloud and mobility strategies leads to 53% greater growth than peers not adopting these technologies. Midmarket organizations adopting big data alone have the potential to grow 50% more than comparable organizations. Effective use of Bring Your Own Device (BYOD) mobility strategies has the potential to increase growth by 53% over laggards or late adopters..

orchestrating tech for greater growth

  • 73% of North American organizations believe the volume and complexity of their data requires big data analytics apps and tools.  This is up from 54% in 2014, indicating midmarket organizations are concentrating on how to get more value from the massive data stores many have accumulated.  This same group of organizations believe they are getting more value out of big data this year (69%) compared to last year (64%).  Top outcomes of using big data include better targeting of marketing efforts (41%), optimization of ad spending (37%), and optimization of social media marketing (37%).

top outcomes

  • 54% of an organization’s security budget is invested in security plans versus reacting to threats. Dell & TNS Research discovered that midmarket organizations both in North America and Western Europe are relying on security to enable new devices or drive competitive advantage.  In North America, taking a more strategic approach to security has increased from 25% in 2014 to 35% today.  In Western Europe, the percentage of companies taking a more strategic view of security has increased from 26% in 2014 to 30% this year.

security strategic

  • IT infrastructure costs to support big data initiatives (29%) and costs related to securing the data (28%) are the two greatest barriers to big data adoption. For cloud adoption, costs and security are the two biggest barriers in midmarket organizations as is shown in the graphic below.

security costs

  • Cloud use by midmarket companies in France increased 12% in the last twelve months, leading all nations in the survey.  Of the 11 countries surveyed, France had the greatest increase in cloud adoption within midmarket companies.  French businesses increased their adoption of cloud applications and platforms from 70% in 2014 to 82% in 2015.

Sources: Dell Study Reveals Companies Investing in Cloud, Mobility, Security and Big Data Are Growing More Than 50 Percent Faster Than Laggards. October 13, 2015


Gartner Top 10 Strategic Technology Trends For 2016

2016 Gartner technology trends graphicGartner announced their top 10 strategic technology trends for 2016 at the Gartner Symposium/ITxpo held October 4 – 8th in Orlando. David Cearley, Vice President and Gartner Fellow, presented the company’s Top Ten Strategic Technology Trends for 2016You can find the video here.

Key take-aways from his presentation and the trends announced are provided below:

  • Enterprise 3D-printing shipments will attain a 64.1% Compound Annual Growth Rate (CAGR) through 2019. David Cearley mentioned during his keynote that jet engines are being 3D printed today.  He gave the example to illustrate that 3D printing will continue to gain adoption in more demanding manufacturing environments including aerospace, automotive, energy, medical devices and military-based markets and industries.
  • Emergence of an entirely new class of business models based on smart machine technologies, advanced analytics and big data. Combining machine learning, continued adoption of Internet of Things (IoT) sensors and supporting data models, and advanced intelligence to interpret and act on the data, Gartner’s predictions set the stage of an entirely new class of business models. Manufacturing-as-a-Service and paying only for the production time used in a factory are within reach for more companies than before based on these predictions.
  • The device mesh will expand to include IoT-based devices that scale well beyond the enterprise. Gartner is predicting that in the next three years traditional computing and communication devices, including desktop and mobile devices will increasingly be augmented by wearable devices, home electronics including appliances with sensors, transportation-based sensors and data collection devices, and environmental devices all capable of capturing data in real-time.
  • A digital mesh will continue to proliferate, aligning apps and devices to individuals’ specific roles and tasks.  Gartner sees this digital mesh as an expanding series of devices, services, platforms, informational networks and individuals that integrate together and provide contextual intelligence and enabling greater collaboration. The proliferation of the digital mesh will lead to more ambient, contextually intelligent and intuitive app design over time Gartner predicts.
  • The next twelve months will also see the proliferation of algorithm-based businesses enabling automated background tasks including smart machines. Gartner’s technology trends for 2016 set a solid foundation for the growth of globally-based smart factories and production centers. Acumatica, Plex Systems and other Cloud ERP providers are ideally positioned for this trend, having proven their ability to provide manufacturing intelligence from the shop floor to the top floor. In addition to cloud platforms, these algorithm-based businesses will need to support unstructured data analysis including latent semantic indexing (LSI), data taxonomy and classification algorithms to ensure data fidelity and scalability, and more robust analytics and predictive modeling systems.
  • Combining algorithms, analytics, data architectures and smart machines have the potential to revolutionize manufacturing quickly. General Electric’s Predix platform, IBM’s IoT Foundation and several other cloud-based IoT platforms are already making progress on transforming the vision of algorithm-based smart machine production strategies into a reality for manufacturers globally.
  • Gartner sees a new IT reality taking shape. Adaptive security, advanced systems, Internet of Things (IoT), mesh app & service architectures are the catalysts of the new nature of IT that Gartner is predicting.

A graphic illustrating the top 10 strategic trends is show below:

top ten technology trends 2016


Gartner Identifies the Top 10 Strategic Technology Trends for 2016.  Press Release Announcement, October 6, 2015.

Video replay of the keynote: The Top 10 Strategic Technology Trends for 2016

Roundup Of Cloud Computing Forecasts And Market Estimates Q3 Update, 2015

  • cloud computing forecastThe global SaaS market is projected to grow from $49B in 2015 to $67B in 2018, attaining a CAGR of 8.14%.
  • Global spending on Infrastructure-as-a-Service (IaaS) is expected to reach $16.5B this year, an increase of 32.8% from 2014.
  • Cloud applications will account for 90% of worldwide mobile data traffic by 2019, compared to 81% at the end of last year.

These and other insights are from recent cloud computing forecasts and market estimates published by research and advisory consultancies including International Data Corporation (IDC), Forrester, Gartner, Ovum, Wikibon and others.

While the methodologies differ significantly, the findings from a recent Economist Intelligence Unit study provide the galvanizing thread across this diverse set of data.  The Economist found that the most mature enterprises are now turning to cloud strategies as a strategic platform for growing customer demand and expanding sales channels. The study found low-maturity or lagging cloud adopters focus on costs more than growth.

Key take-aways from the round-up are provided below:

cloud mobile data

  • 57% of IT architects and tech professionals are running apps on the Amazon Web Services (AWS) platform today.  Rightscale’s 2015 State of the Cloud Report found that AWS adoption is over 4X greater than Microsoft Azure IaaS and 5X that of Rackspace Public Cloud.  Rightscale found that AWS, Microsoft Azure IaaS, Azure PaaS, Rackspace Public Cloud and VMWare vCloud Air are the top five public cloud platforms used in enterprises today. Source: RightScale 2015 State Of The Cloud Report

Public Cloud Usage

paas market trends

PaaS Market Share

  • Goldman Sachs is forecasting the cloud infrastructure and platform market will grow at a 19.62% CAGR from 2015 to 2018, reaching $43B by 2018. Their recent market analysis also forecasts that the global market for cloud infrastructure and platforms will grow from $21B this year to $43B by the end of the forecast period.  Source:  How Big Can The Amazon Web Services Business Grow In The Future?

goldman sachs cloud computing

IaaS Market Window

cloud maturity

hosted private cloud computing adoption

  • 46% of surveyed firms in the European Union (EU) are using advanced cloud services relating to financial and accounting software applications, customer relationship management or to the use of computing power to run business applications. In 2014, almost twice as many firms used public cloud servers (12%) versus private cloud servers (7%). The following graphic illustrates the degree of dependence on cloud computing, by economic activity, EU-28, 2014. Source: Eurostat Statistics Explained.  Cloud computing – statistics on the use by enterprises.

degree of dependence

  • 64% of Small & Medium Businesses (SMBs) are already using cloud-based apps, with average adoption being 3 apps.  78% of businesses indicate that they are considering purchasing new solutions in the next 2-3 years creating the potential to move the average number of applications used to 7, with 88% consuming at least one service.  Source: The small business revolution: trends in SMB cloud adoption.

cool infographic

  • Worldwide spending on enterprise application software will grow 7.5% to reach $149.9B in 2015, increasing to more than $201B in 2019 with accelerating cloud adoption driving new software sales. Gartner’s analysis of enterprise software spending shows that alternative consumption models to traditional on-premises licenses are accounting for more than 50% of new software implementations; these include SaaS, hosted license, on-premises subscriptions and open source.  Gartner also predicts that by 2020, about a quarter of organizations in emerging regions will run their core CRM systems in the cloud, up from around 10 percent in 2012. Source: Gartner Says Modernization and Digital Transformation Projects Are Behind Growth in Enterprise Application Software Market.

Additional resources:

10 Ways Analytics Are Accelerating Digital Manufacturing

  • 42% of manufacturers say big data and analytics as their highest priority in 2015.
  • 56% of power distribution providers rank big data and analytics within their top three priorities for 2015.
  • 61% of aviation companies consider big data and analytics their highest priority this year.

Bottom line: Digital manufacturing strategies are gaining ground as manufacturers adopt big data and analytics to improve operational effectiveness, time-to-market, new product development and increase product quality and reliability.

Analytics Are Fueling Digital Manufacturing Growth

Big data and analytics adoption by manufacturers is the first step many are taking to create a galvanized, intelligent digital thread that unifies every aspect of their value chains. For aerospace manufacturers whose supply chains are exceptionally complex, big data and analytics are revolutionizing value chains starting with suppliers and progressing through all operations.

The majority of manufacturers are relying on analytics to improve order accuracy, shipment & cycle time performance, and product quality. Those excelling at digital manufacturing strategies are gaining additional analytical insights into how they can make decisions more accurately, quicker and with lower potential costs and risks.

The manufacturing industry generates more data than any other sector of the global economy on a consistent basis.   The more complex a given manufacturers’ operations are, the more valuable the insights gained from big data and analytics. The following comparison of big data analytics priorities by industry from a recent speech given by Jeff Immelt, CEO and President of General Electric illustrates this point:

analytics customer survey

Source: GE Minds and Machines Presentation, Jeff Immelt, CEO & President, General Electric.

10 Ways Analytics Are Accelerating Digital Manufacturing 

The ten ways analytics is accelerating digital manufacturing adoption globally include the following:

  • Providing real-time operator intelligence (70%), remote monitoring and diagnostics (66%), and condition-based maintenance (59%) are the three most valuable areas for analytics GE customers mentioned in a recent survey. GE’s industrial customers are looking to tailor pre-built applications that can deliver the eight different functional areas shown in the graphic below.  Manufacturers are looking to asset performance management as an integral part of their digital thread’s analytics and insight.

industrial customer perspective

Source: GE Minds and Machines Presentation, Jeff Immelt, CEO & President, General Electric.

  • Using data modeling to improve production workflows is improving Earnings Before Interest & Taxes (EBIT) by 55% for a chemical manufacturer.  Using analytics and data modeling to make more accurate,  efficient decisions encompassing making or buying ingredients, choosing to substitute an ingredient or not, optimizing equipment usage and/or reliability and gaining incremental sales through increased production capacity is leading to a significant improvement in EBIT for a leading chemical manufacturer on a consistent basis.  The following graphic provides insights into the contributions of each factor in improving EBIT performance.

EBIT Growth

Source: Taming manufacturing complexity with advanced analytics. McKinsey & Company by Patrick Briest, Valerio Dilda, and Ken Somers February 2015. 

  • Planning-execution integration in production centers and real-time production integration are two areas where analytics are having the greatest impact on manufacturers’ operating expenses (OPEX). When analytics are integrated as part of a digital manufacturing strategy, supply chains benefit when Web-EDI (Electronic Data Interchange) and real-time order conformation are implemented and analyzed for continual improvement.

Digital initaitves impact

Source: Operational Excellence through Digital in Manufacturing Industries. Capgemini Consulting.

  • Optimization tools (56%), demand forecasting (53%), integrated business planning (48%) and supplier collaboration & risk analytics (46%) are being rapidly adopted by manufacturers today, setting the foundation for digital manufacturing growth.  Deloitte recently interviewed supply chain executives regarding the thirteen fastest-moving technical capacities they are using today and expect to use in the future. The following graphic provides an overview of supply chain capabilities current in use and what percent of each they expect to use in the future.

use of supply chain capabilities

Source: Supply Chain Talent of the Future Findings from the third annual supply chain survey. Deloitte.  2015.

  • Analytics is integral to making the vision of Industrie 4.0 a reality. Industrie 4.0 is a German government initiative that promotes automation of the manufacturing industry with the goal of developing Smart Factories. Analytics is extensively used in manufacturing centers who are in the process of reengineering their entire operations to attain Industrie 4.0 compliance. Manufacturing value chains in highly regulated industries that rely on German suppliers and manufacturers are also relying on analytics extensively to guide their Industrie 4.0 journey. A recent Deloitte study of Industrie 4.0 adoption found that research and development (43%) will see the greatest transformational contribution from Industry 4.0.

Industry 4.0 areas

Source: Industry 4.0: Challenges and solutions for the digital transformation and use of exponential technologies. Deloitte Consulting, 2015

  • Analytics is enabling manufacturers to also scale real time cloud-based operational intelligence, condition-based monitoring, monitoring & diagnostics and asset lifecycle management across global manufacturing centers.  Capturing, aggregating, analyzing and taking action on analytics across all production centers using the GE Predix Cloud will also accelerate digital manufacturing growth over time.  Integrating analytics, industrial and sensor data into a scalable series of data models and apps delivered as a Platform-as-a-Service (PaaS), GE will make this service commercially available in 2016.  The following graphic illustrates how complex manufacturers could use Predix Cloud to improve operational efficiency and quality.

horizontal capability controls

Source: Jeff Immelt Presentation on Pivot Strategy, December 16, 2014

  • Analytics is providing greater insights into product, process, program and service quality, forcing manufacturers to revamp existing production centers and make them more efficient.  Gaining greater insight into which production centers and factories are delivering the highest quality products and why is now possible.  The vision of unifying quality across an enterprise quality management and compliance (ECQM) framework is now a reality, driving greater digital manufacturing growth as a result. The following graphic from Tableau is an example of a manufacturing quality dashboard.

Mfg quality dashboard

Source: Manufacturing Analytics Quality Dashboard

  • Increasing production yields through the use of more effective supplier quality management and bill of material (BOM) planning integrated within production processes.  Analytics is extensively being used today for supplier audits, supplier quality management and traceability. Capitalizing on the full value of these analytics is a strong catalyst for manufacturers to move closer to digitizing their operations.
  • Using analytics to predict machine failures before they occur reduces downtime, production costs and increase customer satisfaction.  In highly regulated industries production equipment is periodically audited and reviewed for conformance to specific standards.  Integrating even the simplest sensor into production equipment can deliver valuable insights into what factors cause it to fail.  Analytics are providing Failure Mode and Effects Analysis (FMEA) in real-time today, providing manufacturers with a glimpse into which equipment and machinery will most likely fail when. Knowing this can save literally millions of dollars in lost production time.
  • Adopting Pareto Analysis to continually improve schedule, quality and cost performance to the cell or production center level is driving digital manufacturing adoption.  Determining which factors are enhancing or reducing product, process and program quality is now possible using advanced manufacturing analytics. Differentiating between the many symptoms of a quality problem and its root cause is now becoming possible, especially for companies pursuing digital manufacturing strategies.

Additional sources of information on the impact of analytics on digital manufacturing:


55% of Enterprises Predict Cloud Computing Will Enable New Business Models In Three Years

  • NYC Skyline Louis Columbus69% of enterprises expect to make moderate-to-heavy cloud investments over the next three years as they migrate core business functions to the cloud.
  • 44% of enterprises are relying on cloud computing to launch new business models today, predicting this will increase to 55% in three years.
  • 32% are using cloud computing to streamline their supply chains today. Senior executives predict this figure will increase to 56% in three years, a 24% increase.
  • 59% say they use cloud-based applications and platforms to better manage and analyze data today, reflecting the increasing importance of analytics and big data enterprise-wide.

These and other insights are from a recent Oxford Economics and SAP study of cloud computing adoption, The Cloud Grows Up. You can find the study here (no opt-in). In late 2014, Oxford Economics and SAP collaborated on a survey of 200 senior business and IT executives globally regarding the adoption and use of cloud technology. Oxford Economics’ analysts compared the latest survey with one completed in 2012 looking for leading indicators of cloud adoption in enterprises. They found many C- and VP-level executives are taking a more pragmatic, realistic view of what cloud technologies can contribute. Enterprises are moving beyond the hype of cloud computing, putting in the hard work of launching new business models while driving top-line revenue growth.

Oxford Economics has made two interactive infographics available from the study here. The first details cloud adoption, and the second, on how enterprises see cloud computing changing their business models over the next three years.  As cloud platforms and applications become a scalable, secure and for the most part reliable, once-elusive enterprise goals and new business models become attainable.

Key take-aways from the study include the following:

  • Top–line growth (58%), collaboration among employees (58%), and supply chain (56%) are the three areas enterprises expect cloud computing to impact most in three years. The greatest gains will be in the areas of supply chain (a 24% jump), collaboration among employees (20%) and increased agility and responsiveness to customers (17%). The following graphic compares where enterprises are seeing cloud computing’s impact today and a prediction of each areas’ impact in three years.

Figure 2

  • Developing new products & services (61%), new lines of business (51%) and entering new markets (40%) are three key areas cloud computing is transforming enterprises.  With a 35% increase, developing new products and services is the most dominant strategy enterprises are relying on to grow their businesses. See the comparison below for further details.       

developed new services using cloud computing 2

  • 58% of enterprises predict their use of cloud computing will increase top-line revenue growth in three years. 67% see the cloud changing skill sets and transforming the role of HR. The following graphic illustrates the first of two interactive infographics Oxford Economics and SAP are providing with the report. You can access the infographic here.

clouds enduring promise

  • 74% of enterprises say innovation and R&D is somewhat or mostly cloud-based. 61% say they will have developed new products and services in three years as a result of adopting cloud technologies.  The following graphic illustrates the second of two interactive infographics Oxford Economics and SAP are providing with the report. You can access the infographic here.

infographic the cloud grows up

  • Enterprise cloud security strategies are maturing rapidly. From 2012 to 2014, strategies for ensuring the security of API and interfaces increased 24%, from 20% to 44%. Additional concerns that increased include virus attacks (up 19%), and identity theft (up 16%).  The following figure compares the top concerns enterprises have in the area of cloud security.

cloud security

  • 31% of respondents say the cloud computing has had a transformative impact on their business.  48%, nearly half, state that cloud computing has had a moderate impact on business performance. The majority believe cloud computing will have a significant impact on top-line revenue growth in three years.

Figure 31

  • 67% of enterprises say that marketing, purchasing, and supply chain are somewhat and mostly cloud-based as of today. Cloud-based adoption has reached an inflection point in enterprises, with functional areas having the largest percentage of workloads running on cloud-based apps. Enterprise senior executives see the potential to improve innovation, R&D, and time-to-market via greater collaboration using cloud technologies.


2015 Roundup Of Cloud Computing Forecasts And Market Estimates

AA046808Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels.  A Goldman Sachs study published earlier this year projects that spending on cloud computing infrastructure and platforms will grow at a 30% CAGR from 2013 through 2018 compared with 5% growth for the overall enterprise IT.

Centaur Partners and other firms mentioned in this roundup are seeing more enterprise-size deals for cloud computing infrastructure and applications. While each of these consultancies and research firms have varying forecasts for the next few years, all agree that cloud computing adoption is accelerating in enterprises on a global scale.

Key take-aways from the roundup are provided below:

  • By 2018, 59% of the total cloud workloads will be Software-as-a-Service (SaaS) workloads, up from 41% in 2013.  Cisco is predicting that by 2018, 28% of the total cloud workloads will be Infrastructure-as-a-Service (IaaS) workloads down from 44% in 2013. 13% of the total cloud workloads will be Platform-as-a-Service (PaaS) workloads in 2018, down from 15% in 2013.  The following graphic provides a comparative analysis of IaaS, PaaS and SaaS forecasts from 2013 to 2018. Source:  Cisco Global Cloud Index: Forecast and Methodology, 2013–2018. (PDF, free, no opt-in).

Image Cisco SaaS IaaS PaasS Results

  • Centaur Partners’ analysis of SaaS & cloud-based business application services revenue forecasts the market growing from $13.5B in 2011 to $32.8B in 2016, attaining a 19.5% CAGR. Centaur provides a useful overview of current market conditions including M&A activity in their latest market overview published this month, Introduction to Centaur Partners: SaaS Market Overview, (PDF, free, no opt-in).

centaur partners forecast

Top Five Tech Spending Increases

  • Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels.  Spending on integration, storage management, and database management systems are projected to experience the greatest growth in 2015. These and other key insights are from Forrester’s SaaS software subscription revenue by category show below.  Source: Enterprise software spend to reach $620 billion in 2015: Forrester.

Global SaaS Forecast Forrester

  • $78.43B in SaaS revenue will be generated in 2015, increasing to $132.57 in 2020, attaining a compound annual growth rate (CAGR) of 9.14%.  The following graphic and table provides an overview of Forrester’s Global Public Cloud Computing market size analysis and forecast for the years 2011 to 2020. Source: Institut Sage. 

Global Forecast Public Cloud Forrester

Goldman Cloud TAM

Goldman Cloud Disrupting Traditional IT

SMAC Areas

  • IDC predicts that by 2016, there will be an 11% shift of IT budget away from traditional in-house IT delivery, toward various versions of cloud computing as a new delivery model.  By 2017, 35% of new applications will use cloud-enabled, continuous delivery and enabled by faster DevOps life cycles to streamline rollout of new features and business innovation. Source: 2015-2017 Forecast: Cloud Computing to Skyrocket, Rule IT Delivery.
  • By 2018, IDC forecasts that public cloud spending will more than double to $127.5 billion. This forecast is broken down as follows: $82.7 billion in SaaS spending, $24.6 billion for IaaS and $20.3 billion in PaaS expenditures.  Source: Forecasts Call For Cloud Burst Through 2018.
  • By 2016 over 80% of enterprises globally will using IaaS, with investments in private cloud computing showing the greater growth. Ovum forecasts that by 2016, 75% of EMEA-based enterprises will be using IaaS.  These and other insights are from the presentation, The Role of Cloud in IT Modernisation: The DevOps Challenge (free PDF, no opt in). The graphic below provides an analysis of cloud computing adoption in EMEA and globally.

Ovum Cloud Adoption Forecast

SaaS for SCM

Enterprise cloud revenues

  • By 2018, more than 60% of enterprises will have at least half of their infrastructure on cloud-based platforms.  These and other are insights are from the keynote Cloud Business Summit presentation Digital Business, Rethinking Fundamentals by Bill McNee, Founder and CEO, Saugatuck Technology.  Source: Digital Business, Rethinking Fundamentals.

new platform

45% of Global Enterprises Are Running Production-Level Cloud Apps Today

cover graphicMicrosoft’s latest study shows enterprises’ pace of cloud computing adoption continues to accelerate.  Nearly half of the respondents (45%) report they have cloud-based applications running in production environments.  58% report that they selectively target new applications and projects for cloud computing.

Microsoft commissioned 451 Research to complete one of the most comprehensive global surveys to date of hosting and cloud computing, titled Hosting and Cloud Go Mainstream releasing the results earlier this month. The 74 page slide deck of results provides a wealth of insights into the current and future state of hosting and cloud computing.  451 Research constructed the methodology to include interviews with 2,000 companies and organizations of all sizes from 11 countries, with more than a third of respondents coming from the United States.  Microsoft and 451 Research provided the slides showing the result of screener questions, which provides a useful context for analyzing the survey results.

Here are the key take-aways from the study:

  • 45% of enterprises globally are running production-level cloud computing applications today.  North America and Asia have the greatest percentage of enterprises reporting broad implementation of production cloud-based applications (17% each).  North America has the greatest percentage of enterprises in the discovery and evaluation phase of cloud computing adoption at 29%.

cloud computing adoption by region

  •  58% of global enterprises are selectively target new applications for cloud computing, with 18% heavily relying on cloud computing for new projects.  The following graphic shows the distribution of organizations’’ approaches to using cloud computing for new applications or IT projects.

New Apps By Region

  • SaaS (71%) and Hosted Infrastructure Services (69%) are the two most common IT services currently purchased today, with 14% growth forecasted in each by 2016. The fastest growing category is Platform-as-a-Service (PaaS), with 37% purchasing these services today projected to grow another 26% in two years.

current future it services

  • SaaS is most prevalent in enterprises with over 500 employees, and Hosted Infrastructure Services, in government and education.  Please see the graphic below for the distribution of responses by IT service and organization type.


current it services by company size

  • Spending on hosted private clouds will increase from 28% of spending today to 32% in 2016, with traditional dedicated infrastructure services dropping from 48% to 42%.

Hosted Infrastuctrure Services

  •  The majority of SaaS users are employees (45%) followed by businesses (which could be interpreted as suppliers and the broader supply chain) (22%), consumers (18%) and business partners (including distribution channels (14%).

primary application users


  • Telephone conversations with customer support specialists is the most valuable form of communication (just over 60%) across all support channels.  It is also the most preferred channel for SaaS support.

valuable forms of communication

  •  Business applications (17%), databases (14%) and e-mail 12%) are the top three application spending categories today in hosted and cloud applications.  The following graphic breaks out spending by hosting and cloud configuration.

hosted and cloud applications

  • Having a well-defined architecture for security (7.7 out of 8.0), understanding who the end-users are (7.6) and train users to be cautious with access & security (7.5) in addition to having a well-defined architecture for performance (7.5) are the three top best practices for cloud computing projects.

best practices cloud computing projects

  • 44% of enterprises globally have “shadow IT”, meaning business units are spending their own budget on cloud computing projects outside of the IT approval processes.  The following graphic provides the breakdown by type of organization included in the survey.

shadow it

  •  87% of respondents globally would recommend cloud computing to a peer or colleague and 13% would not. When asked why or why not, respondents most often mentioned a good experience and better service/it works (approximately 17%), followed by improving costs/cost effective/cheaper (approximately 16%).  Security issues and concerns (25%) and uncertainty/it’s too new (approximately 16%) are the reasons for not recommending cloud computing.

recommend cloud computing

Roundup of Cloud Computing Forecasts Update, 2013

tunnel-of-speed-forecast-of-saas-cloud-computing-final-300x201Time-to-market, more flexible support for business strategies by IT, and faster response time to competitive conditions are combining to accelerate cloud computing adoption today.

Of the enterprises I’ve spoken with over the last several months including several Fortune 500 corporations to small businesses just beginning to evaluate cloud-based CRM and manufacturing systems, one message resonates from all of them: they need enterprise applications that keep pace with how fast they want to move on new business strategies. The latest round of cloud computing forecasts reflect the urgency enterprises have of making IT a foundation for strategic business growth.

The following is a summary of the latest cloud computing forecasts and market estimates:

McKinsey Analysis

  • IDC predicts public IT cloud services will reach $47.4B in 2013 and is expected to be more than $107B in 2017. Over the 2013–2017 forecast period, public IT cloud services will have a compound annual growth rate (CAGR) of 23.5%, five times that of the IT industry as a whole. The growing focus on cloud services as a business innovation platform will help to drive spending on public IT cloud services to new levels throughout the forecast period. By 2017, IDC expects public IT cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will remain the largest public IT cloud services category throughout the forecast, capturing 59.7% of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively.  Source: IDC Forecasts Worldwide Public IT Cloud Services Spending to Reach Nearly $108 Billion by 2017 as Focus Shifts from Savings to Innovation.

IDC Forecast Public IT Spending

  • Informatica’s presentation titled Enable Rapid Innovation with Informatica  and MicroStrategy for Hybrid IT by Darren Cunningham, Informatica Cloud  and Roger Nolan, Informatica Data Integration and Data Quality contains a useful series of cloud market overviews supported by 451 Research Gartner, Forrester and IDC data.  A summary of the statistics section is shown below:


adoption graphic from KPMG

  • Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period.  Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business?  His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.
  • Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018.  The following figure shows the firm’s forecast.  Source: Visiongain on Slideshare.
  • Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period.  Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business?  His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.
  • Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018.  The following figure shows the firm’s forecast.  Source: Visiongain on Slideshare.

visiongain forecast


  • Boston Consulting Group writes that SaaS is a $15B market, growing at three times that rate of traditional software.  BCG estimates that SaaS is 12% of global spending on IT applications.  BCG interviewed 80 CIOs and found they were willing to consider SaaS solutions for 35% to 60% of their application spending.  BCG also evaluated how the economics of cloud software adoption vary for on-premises versus SaaS customers.  The following two charts from the completed study. Source: (Free, opt-in required) Profiting from the Cloud: How to Master Software as a Service

Profiting_Cloud_Ex1_lg_tcm80-138310 BCG Categories

Profiting_Cloud_Ex2_lg_tcm80-138309 BCG Economics

Asia Pacific Cloud Market Growth


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