The global market for subscription economy SaaS tools are expected to hit $100 billion by 2020, according to a new report by subscription billing, commerce and finance solutions provider Zuora.
What's more, it's said that more than 20 per cent of the Fortune 100 companies will have adopted these solutions by that time.
“We have claimed that all companies are moving to the Subscription Economy, and this study shows that to be true,” said Zuora CEO Tien Tzuo.
“It’s clear to us that the shift to subscription business models requires Relationship Business Management (RBM)™ tools that will drive deep subscriber relationships and create opportunities to monetize virtually anything. We will continue to lead the industry in supporting our customers’ need for rapid innovation, flexibility, and agility to grow and prosper in the future.”
According to the report, the UK is the fifth largest market for subscription management software. Spending is expected to grow by 255 per cent – from $421 million (£295m) to $1.4 billion (£980m) between 2016 and 2020.
Zuora says companies are building new services and experiences for their customers, switching from simply shipping products to 'relationship monetisation'. That means, businesses need new services, with new monetisation opportunities.
“As enterprises attempt to shift to new subscription and on-demand business models, they realize their existing business systems are wholly inadequate,” said MGI Research Analyst Andrew Dailey. “In fact, in some industries, legacy business tools are delaying business model migration, creating an existential threat for some well-known companies. In addition, recurring revenue business models require new approaches to product management, sales, marketing, and even finance.”
According to the report, the new SaaS services can support rapid growth and customer engagement through analytics, which is why businesses are now prioritising them.