Gartner Research

Market Trends: Is SaaS Killing the Software Market?

Published: 03 December 2015

ID: G00275915

Analyst(s): Joanne M. Correia, Laurie Wurster , Adam Woodyer


Changing customer demand and SaaS force traditional application vendors to transform. The immediate impact to the software industry may be lower margins and more competition as traditional vendors can limit the ability of pure-play SaaS vendors to continue to drive cash flow and scale profitability.

Table Of Contents


Market Trend

  • Major SaaS Vendors Are Still in Growth Mode
    • Peer Comparison
  • Market Structure Trend
    • Focus Areas in Growth Phase Can Be Different for SaaS Vendors
    • Is There a Break Point for Profitability in a SaaS Model?
    • Increased Competition From Traditional Software Vendors
  • Buyer Trend
    • SaaS Offerings Extend Reach Beyond IT
  • Technology Trend
    • Barriers to SaaS Adoption Are Falling

Contrarian View

  • If Focus on Growth Over Profitability Continues, These Trends Change
    • An Important View on GAAP Profit and Cash Flow From Operations

Vendors to Watch

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