World’s Cloud Top 500 Applications Vendors

Top 25 Cloud apps vendors accounted for 45% of the $30B market in 2013


In 2013, the Cloud applications market soared 32% to hit $30.3 billion in Cloud subscription revenues, compared with $23 billion in the year-earlier period. The big gain came as a growing number of enterprise applications vendors switched gears by going after Cloud subscription sales in a concerted effort to boost their recurring revenues, sometimes at the expense of their conventional license and maintenance revenues.

The change of heart was inevitable as companies large and small companies embraced Cloud Computing as a clear alternative to on-premise implementations, reducing their IT infrastructure and support expenses along the way.

Adding to that momentum was the continuing expansion of Cloud-only applications vendors that have outpaced the growth of their counterparts in the on-premise world for three reasons.

First, since the end of the financial crisis, institutional investors – ranging from private equity firms to venture capitalists and public investors – have poured tens of billions of dollars into the Cloud applications market bankrolling a smattering of Cloud-only vendors in hopes of displacing the on-premise vendors. For an extended period of time, these on-premise vendors have been feasting on their maintenance revenues by collecting annual fees ranging anywhere from 10% to 25% of the initial sale of software license. Now both license and maintenance revenues are being undermined by the proliferation of Cloud subscription revenues, underscoring a not very subtle sign that investors are essentially betting against the incumbents.

Second, an increasing number of Cloud-only applications vendors have been able to establish a critical mass in a compressed time frame. For example, Zendesk, which specializes in Cloud-based customer service applications, achieved a critical mass of nearly 39,000 customers by successfully leveraging a scalable multi-tenant platform in the first seven years of its history since its founding in 2007. That is a steeper ramp than Cloud pioneer, which saw the growth of its customer count to 13,900 in its first seven years. For incumbents such as SAP and Oracle, these Cloud upstarts – unlike niche vendors playing on the sideline – now pose greater threat to their market and mind shares on a global scale.

Third, one hardly wants to stand before a locomotive in motion and few enterprise applications vendors can take the risks of stopping the train in its tracks. Under such pressures, most vendors have started selling some variations of Cloud applications through public, private, hybrid, hosting or managed services, while switching their one-off licensing scheme to a more dependable subscription model. The behavioral changes are throwing more on-premise vendors over the fences, transforming the way they deliver their applications and services and making their Cloud offerings the fastest growing part of their business.

Through a combination of accelerated product development, mergers and acquisitions and ecosystem expansion, the steep ramp of the top 25 Cloud applications vendors over the past year has been nothing but spectacular, as shown in the following table. These top 25 vendors accounted for $13.7 billion in Cloud subscription revenues, or 45% of the total market in 2013. By comparison, their contributions to the market in 2012 amounted to $9.6 billion, or 42% of the market.

Top 25 Cloud apps vendors accounted for 45% of the $30B market in 2013
Top 25 Cloud apps vendors accounted for 45% of the $30B market in 2013

 Picture 1: Top 25 Cloud apps vendors accounted for 45% of the $30B market in 2013

Altogether their Cloud subscription revenues spiked 43% in 2013, compared with 32% for the whole market. Twelve of them actually grew faster than the overall market in 2013, some by a wide margin. As a whole one-third of Cloud applications vendors on our Cloud Top 500 actually outperformed the overall market with at least a 32% jump in their subscription revenues last year.

 Table 1 – Top 25 Cloud Applications Vendors, Key Markets,
2012-2013 Cloud Subscription Revenues, and Major Developments

Rank Vendor Key Markets 2013 Cloud Subscription Revenues, $M 2012 Cloud Subscription Revenues, $M Growth, % Major Developments
1 CRM 3632 2742 32% Granddaddy of Cloud applications with first mover advantage, acquired ExactTarget for marketing automation in 2013.
2 Microsoft Content Management, Collaboration, CRM 1360 453 200% Grew its Cloud applications revenues largely as a result of Office 365, which achieved $1.5 billion annual run rate by end of FY13.
3 SAP HCM, Procurement, ERP, CRM 1023 463 121% SuccessFactors and Ariba accounted for the bulk of SAP’s Cloud Applications subscription revenues in 2013. Recent acquisitions included Fieldglass for contingent labor management and Seewhy for Cloud marketing.
4 Oracle CRM, HCM, ERP 1021 742 38% Successfully transitioned itself from onpremise to Cloud applications through a series of well-timed acquisitions including Taleo for HCM, Eloqua, RightNow and Responsys for CRM.
5 Adobe CRM 901 613 47% Marketing Cloud and Creative Cloud help transform Adobe from a packaged apps vendor to one that captures volume subscription sales from professional marketers, designers.
6 Concur Travel and Expense Management 516 425 21% Since 1993 Concur has been delivering integrated travel and expense management applications to more than 20,000 customers, reshaping the travel industry with a mix of Cloud apps and network scalability
7 AthenaHealth Healthcare ERP 460 367 25% Athenahealth has emerged as a leading Cloud vendor for over 50,000 healthcare providers including 36,000 physicians that run its apps to manage their practices, revenues, patients and heath records.
8 IBM CRM, HCM, Procurement 425 388 10% Acquisition of Kenexa in 2012 helped boost IBM’s Cloud apps revenues, along with a host of Cloud offerings for marketing, eComemrce and procurement.
9 Workday HCM, ERP 337 181 86% Fueled by its intuitive HCM offerings, Workday added 200 customers resulting in a total of over 600 clients in 2013. Cloud revenues per customer topped $561,000, far above the industry average.
10 NetSuite ERP, eCommerce, HCM, PSA 334 253 32% In 2013 NetSuite accelerated its growth in the Cloud-based ERP applications market with a 32% growth in subscription revenues, compared with 27% in 2012. Installed base jumped to nearly 20,000 from 16,000 a year earlier.
11 Ultimate Software HCM 334 267 25% For more than a decade since Ultimate moved its business model from conventional license sales to Cloud subscription, its recurring revenues have surged over 17 times from $19 million in 2002 to $334 million in 2013.
12 RealPage Real-Estate ERP 326 275 19% Focusing on rental housing market, RealPage’s key attributes is its Cloud infrastructure that supports its fast-growing installed base as well as heavy daily transactions. In 2013 rental units being managed by RealPage apps reached nine million, up 11% from 8.1 million units a year ago.
13 Citrix Collaboration 292 265 10% Citrix has established a loyal following in the online collaboration space with products such as GoToMeeting, GoToWebinar, GoToTraining, GoToAssist, and ShareFile, a cloud-based file sharing and storage solution.
14 Digital Insight Online Banking 290 292 -1% Digital Insight continues to wield considerable influence in the online banking market with an array of customer-facing products as well as electronic bill presentment and payment services for its banking customers. It was acquired by NCR in 2014.
15 Constant Contact CRM 282 249 13% Constant Contact specializes in on-demand Engagement Marketing tools for small to midsized organizations. Its applications are being used 600,000 companies for email marketing, social media marketing, event marketing, local deals and survey products.
16 Cisco Collaboration 270 275 -2% Cisco’s Collaboration Cloud portfolio covers WebEx Meetings for online collaboration as well as other applications for customer service and support. The products are available as a hosted service from Cisco or its partners and service providers.
17 LinkedIn Corporation HCM 258 130 98% Leveraging its popular social network, LinkedIn has emerged as a major force in the HCM applications market offering an increasing number of talent management products designed for corporate recruiters and professional users.
18 Medidata Solutions Healthcare ERP 228 177 29% Medidata Solutions provides cloud-based clinical development solutions for life sciences organizations in the United States and internationally.
19 Intuit ERP 224 127 76% Buoyed by recent acquisitions such as Demandforce, Intuit has continued to transform itself into a Cloud-centric vendor for small business customers.
20 eClinicalWorks Healthcare ERP 220 200 10% With approximately one in five Americans’ health data stored using eClinicalWorks software, the vendor has established one of the largest Software as a Service (SaaS) networks for the healthcare industry.
21 DATEV ERP 215 205 5% DATEV is one of the largest European software companies and IT service providers for tax consultants, auditors and lawyers as well as their clients.
22 Blackbaud CRM 213 162 31% Blackbaud is considered the gold standard in nonprofit vertical. Its Raiser’s Edge has been deployed at more than 13,000 organizations including the biggest charities to automate constituent relationship management and fundraising activities.
23 ADP HCM 199 150 33% For payroll service giant ADP taps into the Cloud positioning Workforce Now as its major Cloud HCM product, while RUN is its Cloud-based payroll service.
24 ServiceNow, Inc. Project Portfolio Management, ESM 175 102 72% ServiceNow has become one of the fastest-growing Cloud applications vendors focusing on project portfolio management and IT service management software. Customer count jumped to 2,195 in 2013, up 34% a year ago.
25 Cornerstone OnDemand HCM 170 106 60% Cornerstone OnDemand is the talent management apps vendor to beat these days as it wins over enterprises by giving them a better way to manage their recruiting, performance management, elearning processes. Number of users topped 14 million in 2013, up 32% a year ago.
  Subtotal   13705 9609 43%  
  Other   16644 13441 24%  
  Total   30349 23050 32%  

Source: Apps Run The World, July 2014

Click here as you drill into the rankings of the top 500 Cloud applications vendors in 2013 and their growth rates last year. Paid subscribers will have full access to the 2011-2013 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.