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Microsoft extends its lead in fast-growing software-as-a-service market

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Software as a service keeps growing like a weed, with Microsoft Corp. extending its lead in the key cloud computing market.

That’s according to Synergy Research Group latest research published Tuesday. SaaS refers to a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted in the cloud. Some of the key segments within this market include customer relationship management and collaboration software.

The latter segment is the primary reason why Microsoft Corp. leads the overall SaaS market in terms of both revenue growth and market share. According to Synergy, Microsoft now commands 17 percent of the market, and is now leading the way “by some distance” since overtaking its nearest rival Salesforce.com Inc. just over two years ago. Much of Microsoft’s SaaS growth is being driven by the “high-growth collaboration segment,” Synergy said.

Overall, the SaaS market is now worth $20 billion a quarter, a 32 percent increase on the previous year. However, at 45 percent, Microsoft’s SaaS growth is outpacing the overall market.

As for Salesforce, it is second in the overall market mostly because it still rules the roost in CRM. But Synergy warned that this is a “relatively low-growth” area compared with other segments of the SaaS market. That means Microsoft could well extend its lead over Salesforce in the following quarters.

Salesforce could also find its runner-up spot being threatened by rivals that include Adobe Inc., Oracle Corp. and SAP SE, which currently round out the top five. Oracle is currently growing fastest, and has helped the top five firms to command just over half of the overall SaaS market.

Still, that’s not to say things won’t change. The next 10 companies in the list include the likes of Google LLC, ServiceNow Inc. and Workday Inc., all of which are seeing strong growth of their own.