In 2014, the worldwide Cloud applications market surged 27% to a record $38.5 billion in Cloud subscription revenues and the top 25 vendors did even better by chalking up a 28% growth rate and securing collectively a comfortable 46% share.
In total these top 25 cloud applications vendors saw their Cloud subscription revenues jumping from $13.9 billion in 2013 to $17.7 billion in 2014, or on an average $712 million each. However, only six vendors on our list of Cloud Top 500 had surpassed that amount last year, underscoring their outsize presence as well as their ability to influence the course of the Cloud applications market for years to come.
Since 2011, the Cloud applications market has more than doubled from $16 billion to $38.5 billion, now accounting for 20% of the overall enterprise applications space. Four years earlier, it was 10%. By 2019, Cloud applications subscription revenues could make up 35% of the total addressable market opportunity.
Based on written responses from hundreds of vendors and our continuous research on tens of thousands of end-user customers, the Cloud applications market is expected to become the primary reason that sustains the growth of the $200-billion enterprise applications space through the five-year forecast period. You can read more on our Cloud applications market forecast here.
These top 25 Cloud applications vendors, which focus on 10 functional and 21 vertical industries, have won the first round in the highly competitive and fragmented Cloud applications market by mastering the art of building or acquiring an all-encompassing product portfolio that in some cases enables them to reach millions of Cloud subscribers in a short amount of time.
Despite their heft in the Cloud, these top 25 vendors were able to extend their lead in hotly-contested markets such as Customer Relationship Management and Human Capital Management, while becoming more entrenched in their target verticals from banking and financial services to healthcare.
Fueled by low interest rates, the 2015 consolidation wave that has spawned a record number of mergers and acquisitions in different industries prompted many of the top 25 vendors to do the same. Over the past year SAP acquired Fieldglass for its contingent labor management applications, Salesforce.com picked up RelateIQ for CRM apps for small businesses, and LinkedIn spent $1.5 billion to buy online learning content provider Lynda.com, its biggest ever acquisition.
One of the most closely-watched developments is the pending acquisition of SunGard by FIS Global, another heavy weight in the financial technology space for core banking and transaction processing, in a $5.1 billion deal.
SunGard will be instrumental in helping restore organic growth for FIS Global, which has seen steady increases in its transaction and processing revenues primarily through acquisitions of other payment processors and core banking vendors for the past several years. SunGard, which broke out its Cloud applications revenues for the first time in March 2015, saw a slight uptake of its Cloud revenues in 2014 while its traditional software revenues were sluggish due to reductions in its legacy products.
If SunGard succeeds in melding the Cloud products of FIS Global into its treasury and risk management offerings and migrating some of FIS Global’s customers to the Cloud, it could present serious threats to Digital Insight and ACI Worldwide, the other top 25 Cloud vendors focusing on banking and financial services vertical.
The 2015 combination of Cerner and Siemens Health Services in a $1.3 billion deal could have profound implications for scores of Cloud healthcare applications vendors including athenahealth and eClinicalWorks on this year’s list.
Some of these top 25 Cloud applications could be vulnerable if they fail to deliver. In May 2015, Constant Contact issued a lower than expected forecast for the remainder of 2015, citing decelerating revenue growth trend. The revised forecast pointed to a 12%-14% growth for the full-year revenues, compared with the 16% gain Constant Contact achieved in 2014. The downward forecast suggested growing competition in the email marketing applications market with bigger vendors such as Oracle, Salesforce.com and others bundling the product into their overall CRM suite, making point solutions like Constant Contact much more difficult to sustain their differentiating factors, let alone their pricing power.
The bottom line is that a painful shakeout among these top 25 vendors, or the Cloud Top 500 at large, will not be far off.
Top 25 Cloud Applications Vendors
The following table highlights major developments that the top 25 Cloud applications vendors are undertaking in order to sustain their growth, along with their 2013-2014 Cloud HCM subscription revenues and their customer count.
Top 25 Cloud Applications Vendors In Target Markets With 2013-2014 Revenues, 2013-2014 Growth, No. of Cloud Apps Customers and Major Developments
|Rank||Vendor||Key Market||2014 Cloud Apps Revenues, $M||2013 Cloud Apps Revenues, $M||2013-2014 Growth, %||No. of Cloud Apps Customers||Major Developments|
|1||Salesforce||CRM||4226||3262||30%||150000||Salesforce.com started branching out into other strategic markets including analytics in 2015. Its 2014 acquisition of RelateIQ intensified SMB push.|
|2||Microsoft||Content Management, Collaboration||2046||1360||50%||50 million||Flagship product Office 365 has some 50 million active commercial users every month and Microsoft is working through partners to boost sell-through rates and widen channel ecosystem support.|
|3||SAP||HCM, Procurement, CRM, ERP||1300||1023||27%||30000||SAP has more than 30,000 customers running different Cloud applications with Concur, SuccessFactors and Ariba representing the bulk of the installed base. The number of users of SAP Cloud now tops 50 million.|
|4||Oracle||CRM, HCM, ERP||1244||910||37%||16000||In June 2015 Oracle reported signing nearly 4,000 Cloud applications customers during its fiscal 2015, resulting in a total installed base of about 16,000.|
|5||Adobe||CRM, Content Management||1171||901||30%||10000||For Marketing Cloud, Adobe has continued to gain ground among its base of over 5,000 customers including some of the biggest consumer brands in the world. In 2014, Adobe signed nearly 110 Marketing Cloud contracts of greater than $1 million.|
|6||SunGard||Banking & Financial Services||1040||1021||2%||5000||In 2015 SunGard abandoned its IPO plan and instead agreed to be acquired by FIS Global, which specializes in transaction processing and core banking solutions.|
|7||athenahealth||Healthcare||581||460||26%||64648||In 2015 athenahealth acquired RazorInsights for its cloud-based electronic health record apps and financial solutions for rural, critical-access and community hospitals.|
|8||Workday||HCM, ERP||533||337||58%||1000||After signing 1,000 customers, Workday has expanded into other key applications markets including Enterprise Performance Management and Professional Services Automation, while bolstering its machine learning development efforts for advanced analytics.|
|9||IBM||HCM, CRM||500||425||18%||15000||Fueled by its Cloud apps such as Kenexa for HCM, Demantec for demand management, and Tealeaf for CRM, IBM already achieved $7 billion in revenue for Cloud-based solutions in 2014, up from $4.4 billion in 2013 and $2.6 billion in 2012.|
|11||Ultimate Software||HCM||419||334||25%||2800||With a long track record of selling Cloud applications, Ultimate Software has perfected the mechanics of supporting a wide array of customers with high retention, which has remained over 95% in the past 10 years.|
|12||RealPage||Real Estate||390||362||8%||10700||In 2015 RealPage acquired ICIM Corporation, or Indatus, for its cloud-based, smart answer automation and routing solutions that handle maintenance calls for over 11,000 apartment communities.|
|13||ServiceNow||IT Service Management, PPM||374||230||63%||3000||In 2015 ServiceNow made further inroads into different functional areas within the enterprise by announcing its Fuji framework. The framework allows for delivery of new applications that enable users to access enterprise services such as legal and finance information more easily.|
|14||HCM||374||258||45%||24000||In 2015 LinkedIn acquired Lynda.com for $1.5 billion as it expanded into online learning by picking up a large video library of courseware and skills content.|
|15||Intuit||ERP||344||224||54%||965000||Intuit projects to double its base of QuickBooks Online customers to 2 million by the end of 2016 as it continues to restructure its operations including its recent decision to spin off Demandforce, QuickBase and Quicken to focus on Cloud Financials and Tax Filing.|
|16||Digital Insight||Banking & Financial Services||331||296||12%||722||The January 2014 acquisition of Digital Insight by NCR has provided more resources for the former to grow its online banking business by leveraging NCR’s extensive ties with banks and financial institutions|
|17||Citrix||Collaboration||327||292||12%||330000||In 2014 Citrix saw a 12% rise of its SaaS business led by continuing growth in its Cloud collaboration applications such as GoToMeeting. In October 2014, Citrix moved into the digital signature space by acquiring RightSignature for $38 million.|
|18||Constant Contact||CRM||325||282||15%||600000||In May 2015, Constant Contact issued a lower than expected forecast for the remainder of 2015, citing decelerating revenue growth trend.|
|19||ACI||Banking & Financial Services||293||263||11%||4500||Having purchased S1 for its core banking solutions for big financial institutions and Online Resources Corp. for credit unions and community banks, ACI is expected to make further inroads into these accounts with an extensive portfolio of bill presentment and payment products, along with new fraud prevention, risk management and compliance solutions.|
|20||Medidata Solutions||Healthcare||280||228||23%||539||MediData is well positioned to expand in markets such as China where drug development may accelerate because of government mandate to boost research in strategic areas such as life sciences.|
|21||Cisco||Collaboration||270||270||0%||10 million||Cisco has revamped its WebEx offering with a new look and feel, and continues to support a broad range of use cases from small collaborative meetings to webinars and virtual events.|
|22||Blackbaud||Non Profit||263||213||23%||30000||With the acquisition of MyCharity in Ireland, Blackbaud expects considerable growth in Europe for its CRM applications for non-profit organizations in the region.|
|23||eClinicalWorks||Healthcare||245||220||11%||100000||With approximately one in five Americans’ health data stored using eClinicalWorks software, the vendor has established one of the largest Software as a Service networks for the healthcare industry.|
|24||ADP||HCM||239||199||20%||50000||Since 2011 ADP has invested more than a billion dollars in acquisitions as well as internal development efforts to bulk up its HCM offerings. Next step is to go global by selling best-in-class Cloud HCM, payroll offerings to its multinational customers.|
|25||DATEV||ERP||225||215||5%||25 million||DATEV is taking a hybrid approach by becoming less of a business process outsourcer, but rather a service provider that can deliver Cloud-based software releases on a frequent basis.|
Click here as you drill into the rankings of the top 500 Cloud applications vendors in 2014 and their growth rates last year. Paid subscribers will have full access to the 2011-2014 Cloud subscription revenues of these top 500 vendors, along with their profiles, which are based on our SCORES methodology that measures their growth along six dimensions: Strengths, Customers, Opportunities, Risks, Ecosystem, and Share.
For more on our SCORES methodology, check here. Don’t forget to look up our Cloud Applications taxonomy as well as a searchable database of thousands of Cloud applications customers that have been taking advantage of the latest innovation from these vendors.