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Understanding SAP’s Rapid Growth in the SaaS Space in 2015

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SAP’s high growth in SaaS in 2015

Previously in this series, we discussed the importance of SAP’s (SAP) S/4 HANA in the company’s cloud strategy. This is the reason SAP’s S/4 HANA is likely to dominate company’s fiscal 2Q16 results.

Synergy Research Group’s data shows that Salesforce (CRM) leads the SaaS (software-as-a-service) space. But SAP actually recorded the highest growth in the SaaS space in 2015 with a 73% growth.

Despite being a leader, Salesforce recorded the lowest growth (21%) among the top ten players. Microsoft (MSFT), which trails Salesforce with a 13% market share, recorded a 70% growth and was able to improve its market share in the SaaS space by three percentage points. In terms of the overall cloud space, Amazon (AMZN) holds the title of market leader.

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The fastest-growing segment in cloud

According to the Cisco (CSCO) Global Cloud Index, SaaS is expected to be the fastest-growing cloud service through 2018. SaaS is expected to grow at a CAGR (compound annual growth rate) of 33%, whereas the cloud market as a whole is expected to grow at a CAGR of 24%.

Synergy Research estimates shows that although SaaS accounted for only 8% of overall software sales, it grew by approximately 40% in 2015, and it’s very likely that it will grow by more than threefold in the next five years. As one of the top five players in the SaaS space, SAP is thus likely to benefit from increased SaaS adoption.

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