Just how fast is SaaS and Cloud growing? One thing we know — Fast. Still. Even now, at hundreds of billions in annual spend.
Gartner’s latest report illustrates just that. Cloud software spending grew a stunning 23% in 2021, from $270 billion to $330 billion. But that’s just the start. After polling CIOs, Gartner found that total SaaS spend will grow from $100B in 2020 to $140B in 2022:
A few interesting implications and learnings:
- The growth in SaaS buying should give you a +20% a year boost on top of your other sales and marketing efforts. That’s a huge tailwind. Budgets and spend are increasing a stunning 20% a year in SaaS. It’s not a zero-sum game, with stagnant budgets.
- “Get in Early” to big accounts, almost whatever it takes. Yes, we all now know top SaaS leaders have world-class NRR, from 110% to 160%. The fact that SaaS spend will further grow 20% a year means these early, big accounts will be even most important over time. Do whatever it takes to close that great logo and account.
- Enterprises are spending an additional $20B on SaaS each year. That’s $20B more budget than last year, just for enterprises alone. Go grab your piece.
- The SaaS companies with $1B in ARR have 1% of all total enterprise spend. Ok, it’s quite possible Gartner is way underestimating SMB spend here, the total spend on SaaS is likely $200B or more. Still, it’s interesting to think that the $1B ARR club at least in the enterprise is perhaps capturing 1% of all spend. E.g., if Slack at $1B is 50% enterprise, that probably means 0.5% of all enterprise SaaS spend is going to Slack. 2% for Zoom (50% of $4B in ARR). Etc. etc.
No matter what, the wave of enterprise spending that fueled 100 SaaS and Cloud unicorns is just getting bigger and strong.
This is your time, folks. Go make it happen.
In my 148 public SaaS companies (including most of the categories of this list but not AWS, Azure, GCP) the aggregate revenue is $185B.
Taking into account 94% of Software companies are private, I'm curious about how Gartner gets this $270B figure, I think is much bigger.
— Gabriel Colominas (@GabrielCoBi) April 27, 2021