SaaS: The quiet power behind cloud computing

Cloud computing has long been heralded as the backbone of digital transformation, but not all parts of the cloud market are treated equally. As of 2025, software as a service (SaaS) continues to dominate the cloud computing landscape, with the global SaaS market expected to generate approximately $390.5 billion in revenue this year. This number not only eclipses the platform-as-a-service (PaaS) market, which is expected to reach $208.6 billion, and the infrastructure-as-a-service (IaaS) segment, projected at $180 billion, but also reveals the central role SaaS has come to play in business operations worldwide.

Take a look at the leaders in each segment to see why these markets have experienced such rapid growth. The top three SaaS products are Salesforce, Adobe Creative Cloud, and Microsoft 365. IaaS is led by Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform, which together hold over 63% of the global infrastructure share. In PaaS, Salesforce’s platform features prominently alongside AWS Elastic Beanstalk and Microsoft Azure App Service. Despite SaaS’s clear revenue and adoption dominance, when cloud computing is discussed in the boardroom or at industry events, IaaS nearly always takes center stage.

Why cloud strategy overlooks SaaS

When people talk about “the cloud,” they typically think about spinning up servers, storing files, or leveraging compute power—all classic IaaS. The reason for this starts with the cloud’s origin story: infrastructure. The earliest and most transformational cloud narratives involved offloading expensive, difficult-to-maintain hardware and data centers to massive, shared platforms operated by Amazon, Microsoft, or Google. As a result, IaaS defined what it meant to move to the cloud.

Meanwhile, SaaS was quietly becoming part of everything. Email, office productivity, CRM, analytics, security—if you examine the typical enterprise software landscape, most are SaaS solutions. They require no infrastructure decisions, little maintenance, and are often purchased by business units rather than IT. Many see SaaS simply as “apps” rather than part of the cloud industry. This semantic gap, along with the technical appeal of building and managing IaaS, explains why SaaS isn’t a main focus in most cloud-first conversations—even though it makes up the majority of cloud spending.

Enterprises often invest heavily in developing or migrating custom applications to IaaS or PaaS platforms, handling everything from storage and security to scaling and updates. Yet, many of these investments are unnecessary when a ready-made SaaS solution can address the same business needs more quickly and with less risk. The real question for enterprises isn’t how to architect something on the cloud, but rather, can they find a SaaS solution that already exists.

SaaS offers more than just plug-and-play convenience. These solutions are engineered for out-of-the-box scalability, compliance, and integration, allowing organizations to focus resources on the unique aspects of their business. The hidden cost of custom IaaS solutions isn’t just measured in price, but also in time to value and complexity. In a competitive environment where speed and responsiveness prevail, leveraging the best-in-breed SaaS for HR, finance, analytics, or compliance gives enterprises an agility edge.

Furthermore, SaaS procurement is becoming more business-led, which spreads innovation across departments. The average company now uses more than 250 SaaS applications, and for good reason. Every department—marketing, operations, finance, HR—has vertical-specific SaaS solutions designed for their changing needs. This decentralized approach to procurement delivers business innovation where it’s needed most.

Integrating AI in SaaS

The next transformation for SaaS is already happening: AI is being integrated directly into SaaS products, from CRM systems that automatically summarize customer sentiment to productivity tools that suggest actions or create custom content. For most enterprises, developing advanced AI and machine learning capabilities on their own infrastructure is simply out of reach. SaaS changes the game by offering prebuilt, continuously improving, and tested AI right where users work. It levels the playing field and speeds up adoption. You don’t need a data scientist in order to benefit from the latest advancements; the SaaS provider takes care of it for you.

As these AI-powered SaaS platforms expand, companies are realizing that their ability to stand out no longer depends on proprietary infrastructure or data pipelines, but on how effectively they utilize these tools to create business value. The flexibility of SaaS allows businesses to regularly update and benefit from AI advancements without significant investments or major overhauls.

SaaS and digital transformation

It’s time for IT and business leaders to look at ways SaaS can provide greater business value:  

Conduct a comprehensive audit of business processes to identify where SaaS can replace legacy or custom-built systems, freeing IT resources to focus on strategic work rather than operations.

Proactively manage SaaS sprawl to ensure integrations, security, and compliance are standardized as SaaS adoption accelerates across departments.

View the value delivered by AI-enhanced SaaS as an organizational catalyst. Push vendors about their AI road maps and look for platforms that make it easy to access and deploy new intelligence features to every user.

SaaS is not just the largest part of the cloud computing market; it is the engine quietly propelling digital transformation. As AI enhances SaaS, organizations that shift their cloud perspective from infrastructure obsession to solution-centric adoption will be best positioned for speed, agility, and growth. The time has come to give SaaS the strategic attention and investment it deserves.