What is SaaS? Software-as-a-Service Guide for Investors

What is Software-as-a-Service (SaaS)?

SaaS is changing the way businesses and individuals use software. Instead of buying software as a one-time purchase and installing it on a single device, SaaS allows users to access applications through the internet on a subscription basis. 

This means greater convenience, flexibility, and often lower costs for users compared to traditional software.

A well-known example is Microsoft. In the past, people had to buy Microsoft Office as a one-time purchase, install it via a CD-ROM, and use it on a single computer. 

Today, Microsoft 365 offers the same software—like Word, Excel, and PowerPoint—through a cloud-based subscription, allowing users to access their files from anywhere and enjoy regular updates.

Advantages of SaaS

SaaS provides multiple benefits for businesses and users. Here are some key advantages:

• Stable and Predictable Revenue: Subscription-based pricing ensures businesses receive regular income, making it easier to plan for the future.
• Higher Business Value: Companies that earn consistent income through subscriptions are often seen as more valuable compared to those relying on one-time sales.
• More Sales Opportunities: Customers who are already using a subscription service are more likely to buy additional features or upgrades, increasing overall sales.
• Better Understanding of Customers: Subscription services collect useful data on customer preferences and behaviour, helping businesses improve their products and services.

Who are the Major Players in SaaS?

The SaaS industry is highly competitive, with both tech giants and niche players offering specialised software solutions. 

Some of the biggest SaaS companies include:

• Microsoft – Productivity tools (Word, Excel, Teams)
• Salesforce – CRM software
• Adobe – Creative and design tools
• SAP & Oracle – Enterprise management software
• Zoom – Video communication
• Shopify – E-commerce platform
• HubSpot – Marketing and sales automation

Industry Growth Trends in SaaS

Rapid growth in the past decade

The SaaS market has experienced rapid growth in the past decade, with strong demand from businesses looking for flexible and scalable software solutions. 

In 2024, the global SaaS market grew by 20%, reaching an estimated US$399.1 billion in revenue. 

Looking ahead, it is projected to expand at an annual growth rate of 12%, potentially surpassing US$800 billion by 2030.

The global SaaS market is projected to grow at a 12% CAGR from 2024 to 2030

Source: Grandview research

North America remains the largest market 

While North America remains the largest market—accounting for nearly half of global SaaS adoption—the Asia Pacific (APAC) region is emerging as a key growth driver. 

The APAC SaaS market grew by 22.5% in 2024, reaching US$86.4 billion, according to Grandview Research. 

The industry is expected to continue expanding at a steady pace, potentially hitting US$201 billion by 2030. This growth is fueled by increasing cloud adoption and digital transformation efforts across industries.

The Asia Pacific SaaS market is projected to grow at a 15% CAGR from 2024 to 2030

Source: Grandview research

SaaS companies expanding footprint in APAC

Many SaaS companies have also expanded into APAC to tap into growth in the region. 

For example, Salesforce announced in March 2025 that it plans to invest US$ 1 billion in Singapore over the next five years, as it continues to grow its customer base and partner ecosystem in the region.

Avepoint launched its new S$100 million international R&D hub in Singapore in 2022, deepening its base in the country after the company previously won a S$37 million contract from Singapore’s Temasek Polytechnic and five other higher learning institutions to deploy an integrated SaaS training management platform. 

AI is becoming a game-changer 

Artificial Intelligence (AI) is becoming a game-changer in the SaaS industry. AI-powered tools are no longer just optional features; they are becoming core components of modern software. 

AI applications such as predictive analytics help businesses improve customer retention by identifying at-risk users, while AI-powered chatbots streamline customer service and onboarding processes.

Consultancy McKinsey’s analysis suggests AI could generate up to US$15 trillion in value. However, AI adoption remains low currently, with around 50% to 60% of companies using AI but struggling to scale it effectively. 

Strong demand for AI-driven SaaS solutions

Companies like Salesforce are already seeing strong demand for AI-driven SaaS solutions. For example, its AI product, Agentforce, secured over 1,000 paid deals, highlighting the market's willingness to invest in AI-enhanced software.

Industry analysts predict that AI-driven SaaS solutions will see the fastest growth, with an expected 30% annual growth rate in the coming years.

As more software integrates AI, continuous improvements will be made based on user feedback and real-time data, creating a cycle of innovation that enhances software efficiency and business outcomes. 

Learn more about the SaaS industry with our upcoming webinar

Curious about Software-as-a-Service (SaaS) and its rapid rise in the digital economy? 

Join Beansprout for an exclusive webinar on 27 March where we break down what makes SaaS a fastest-growing sector, and what it means for investors like you! Sign up for free here. 

Learn more about the SaaS industry by downloading our guide for investors here. 

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