Saudi Arabia Software as a Service (SaaS) Market Research Report: Forecast (2023-2028)

Market Definition

SaaS (Software as a Service) is a software delivery model in which a service provider hosts the application and makes it available to customers via the Internet without the need for local installation or management of the infrastructure. Compared to traditional models, SaaS offers several advantages like enhanced flexibility, scalability, & cost-effectiveness as organizations can opt for these solutions on a pay-as-you-go basis and thus avoid the upfront costs of purchasing licenses & infrastructure.

Market Insights

The Saudi Arabia Software as a Service (SaaS) Market is projected to grow at around 18% CAGR during the forecast period, i.e., 2023-28. The growth of the market would be driven primarily by various digital transformation initiatives by the government & organizations, the cost advantages of SaaS, the ever-increasing need for agility & innovations in businesses, and the mounting focus of organizations on enhancing customer experiences. Besides, the increasing connectivity & collaboration requirements of organizations are also projected to boost the market in the future as SaaS solutions provide collaboration tools, document-sharing platforms, and integrated workflows, which can aid businesses in enabling seamless communication and enhancing productivity across different teams & departments.

Moreover, massive investments in smart grids, growing automation trends in chemical plants as well as other manufacturing & assembling units, and the increasing government emphasis on strengthening the IT infrastructure by investing in disruptive IT solutions, digital transformation, entertainment hubs, advanced healthcare institutes, etc., i.e., in line with Saudi Vision 2030, are further expected to bode well for the market expansion in the coming years.

Traditional software models often involve massive upfront costs for licenses, hardware, & maintenance. On the contrary, SaaS is a subscription-based or pay-as-you-go model that allows organizations to pay for what they use and scale their software resources according to their requirements. This cost-effectiveness associated with SaaS makes it attractive to various businesses in Saudi Arabia, especially SMEs, as they have tighter budgets.

Furthermore, SaaS solutions offer customer-centric applications like CRM systems, marketing automation platforms, and helpdesk tools that can help businesses to deliver personalized customer experiences and enhance overall customer satisfaction. Hence, these factors are expected to spur growth in the Saudi Arabia Software as a Service (SaaS) Market through 2028 and create lucrative prospects for the leading companies operating in the industry to generate significant revenue.

Market Dynamics

Key Driver: Various Government Initiatives for Digital Transformation in Saudi Arabia

The government of Saudi Arabia, as well as both public & private sector companies in the country, are actively taking digital transformation initiatives for prioritizing agility, efficiency, productivity, & innovations to improve customer experiences, in which cloud computing plays a crucial role. As SaaS, being a cloud-based model, provides flexible, scalable, and cost-effective software solutions that can be quickly deployed & aligned with evolving business requirements, they align well with this digitization approach of the country. In addition, these solutions free businesses from the limitations of conventional on-premise software and thus enable them to innovate & launch new services & products more efficiently. Hence, these aspects are projected to drive the Saudi Arabia Software as a Service (SaaS) Market during 2023-28

Growth Restraint: Data Security and Privacy Concerns among Organizations

Among the most critical considerations for organizations adopting SaaS solutions are data security & privacy. Some companies, especially those in highly regulated industries like the BFSI & healthcare, have concerns over data breaches, compliance with local data protection regulations, and data sovereignty. As a result, they refrain from opting for SaaS solutions, which is the prime aspect projected to hinder the Saudi Arabia Software as a Service (SaaS) Market during 2023-28 unless these concerns are addressed by ensuring robust security measures.

Market Segmentation

Based on Business Application:

• Customer Relationship Management (CRM)
• Human Resource Management (HRM)
• Enterprise Resource Planning (ERP)
• Operations and Manufacturing (O&M)
• Supply Chain Management (SCM)
• Others (Security Management, Transaction Processing, etc.)

Of these all, Enterprise Resource Planning (ERP) solutions hold a prominent share of the Saudi Arabia Software as a Service (SaaS) Market. These software solutions offer scalability, flexibility, & cost-effectiveness, which is why they are being adopted extensively by both SMEs & large-scale enterprises businesses in Saudi Arabia for managing & integrating core business processes like finance, human resources, inventory, & supply chain.

Compared to traditional on-premises ERP systems, SaaS-based ERP solutions are more cost-effective and offer enhanced accessibility & scalability. Hence, using pay-as-you-go models of SaaS, organizations are able to avoid upfront infrastructure costs associated with server installations & maintenance, scale their ERP usage as required, and reduce the total cost of ownership. In addition, since these solutions offer easy accessibility to users across multiple locations, it becomes highly beneficial for companies with branches or operations in different cities, especially in a geographically expansive country like Saudi Arabia.

Moreover, SaaS-based ERP solutions can be deployed quickly as the infrastructure & software are already in place, and organizations can easily configure & customize the solution to meet their specific business processes. This agility in deployment enables companies operating in Saudi Arabia to expedite their digital transformation efforts while realizing the benefits of ERP without major delays. Hence, these aspects are driving the demand for SaaS-based ERP solutions in the country and, in turn, spurring growth in the Saudi Arabia Software as a Service (SaaS) Market.

Based on End-User:

• BFSI
• Information & Communication Technology
• Hospitality
• Healthcare
• Manufacturing
• Government Agencies
• Others (Educational Institute, Water Treatment Plants, etc.)

Here, the BFSI sector accounts for a significant market share. It is one of the prominent industries that has shown increasing adoption of SaaS solutions in Saudi Arabia. Integrating SaaS services in banks & other financial institutions offers advanced security and enhanced access management. By controlling access rights using a uniform framework for user authentication and imposing perimeter network control through pre-defined firewalls, intrusion detection, & prevention systems, banks can minimize the risk of security breaches.

In addition, companies operating in the BFSI sector have stringent compliance & security requirements. As SaaS providers often invest substantially in robust security measures & regulatory compliance certifications, it helps banks & financial institutions meet industry standards & data protection regulations. Moreover, using SaaS solutions, the BFSI sector can free up internal resources & IT teams to focus on core proficiencies like risk management, customer service, as well as innovations rather than putting time & effort into software maintenance & infrastructure management. Hence, these benefits of SaaS solutions are playing a crucial role in amplifying their adoption in the BFSI sector and, in turn, stimulating the overall growth of the Saudi Arabia Software as a Service (SaaS) Market.

Recent Developments in the Saudi Arabia Software as a Service (SaaS) Market

• On 9 August 2022, National Marine Dredging Company (The Group), one of the world's leading EPC (Engineering, Procurement, Construction) and Marine Dredging groups headquartered in Abu Dhabi, selected Oracle Fusion Cloud Applications Suite to improve the efficiency of various functions of the company's business operations.
• On 3 November 2021, Accenture completed the acquisition of AppsPro, a leading Oracle Cloud implementation service provider in Riyadh, Saudi Arabia. The acquisition expands Accenture's robust Oracle Cloud capabilities globally, helping to deliver additional value to clients in the Middle East on their journeys to the cloud.
• The same year & month, Clear (formerly ClearTax), India's leading fintech SaaS company, launched its cloud-based electronic invoicing solution for medium to large enterprises operating in the Kingdom of Saudi Arabia..

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