The newly released Zylo SaaS Management Index '24 unveiled that 13% of SaaS apps are bought via 🛒cloud marketplaces (AWS, Google Cloud, Azure) or via resellers (CDW, etc.). This highlights the early stage of Cloud GTM with anticipated growth.
Zylo is a leading SaaS management platform overseeing 30M SaaS licenses and $34Bn in spend.
It discovered that cloud marketplaces and resellers account for 13% of SaaS apps equating to 9% of SaaS spending. This trend is "largely consistent across all segments, including enterprises."
📈 Researches however expect the portion of SaaS purchased through hyperscaler marketplaces or resellers "will grow in the coming year.”
The primary reason is because cloud marketplaces “offer significant benefits to buyers, including marketplace spend qualifying for discount programs and consolidated billing for marketplace purchases.”
👔 Growing Power of LOB in SaaS
A key insight from Zylo's research over the years is diminishing IT ownership over SaaS used by businesses. This trend persisted into 2023, with IT owning 28% of spend and 17% of apps, a further decrease from 31% of spend and 18% of apps in 2022.
Today lines of business (LOB) are controlling an impressive 69% of SaaS spend in 2023 or 48% of apps used by businesses.
If you’re selling SaaS, LOBs are likely your primary targets.
🎯 Towards (De) Centralized SaaS Management
Despite this trend, businesses have incentives to centralize purchasing (using marketplaces?) to combat the challenges of shadow IT, a persisting problem. Another reason is 5X higher risk of cybersecurity incident if companies don’t have centralized visibility.
A significant 84% of IT and Software Asset Management (SAM) leaders surveyed indicate their company is shifting from a decentralized SaaS ownership model to an IT-led approach.
They aim to enable business units to make purchasing decisions and own apps but want oversight into the process along with other key stakeholders like Privacy, Infosec, Procurement, etc. This is exactly where cloud marketplaces offer advantages.
✅ Rationalization Meets Optimization
An impressive 93% of IT and SAM professionals now integrate SaaS management into their cloud optimization efforts.
The continuous focus on optimization led to a 25% reduction in SaaS spending from 2021 to 2023, with the average spend falling from $60M to $45M.
The average number of apps used by organizations in 2023 decreasing to 269, showcasing a trend towards leaner tech stacks.
⏳ However, looking back to 2008, when Gartner reported worldwide SaaS revenue of $6.4Bn, we see that SaaS has grown exponentially in 15 years, reaching a projected spend of $243.9 Bn in 2024.
Will SaaS re-accelerate and will cloud marketplaces consolidate a large portion of SaaS spend in the coming years? For many, the answer may be quite obvious.
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