Q1 2023 SaaS Market Insights

The SaaS market has experienced 6.7% growth in Q1 2023 over Q4 2022, with software spend increasing by 1.7% March over February. As businesses continue to prioritize digital transformation, certain software categories such as Design and Customer Success continue to experience impressive year-over-year growth. This blog post delves into the latest software spend trends, top growing categories, and the most popular new software applications in March 2023, offering valuable insights into the current state of the SaaS market.

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Software Spend Up in March 2023 vs. March 2022…

… and increases Month on Month in March 2023

The Full Spend Picture**

In March, overall SaaS spend increased by 1.7%, with the top quartile experiencing a growth of 1.6%, the second quartile at 2.2%, the third quartile at 0.7%, and the bottom quartile at 2.7%.

For Q1 (January to March), overall SaaS spend experienced mixed results. January saw an increase of 1.3%, with a significant growth of 8.0% in the top quartile. However, February experienced a decline of 3.7% in overall SaaS spend, with all quartiles showing negative growth. Finally, in March, as mentioned earlier, the overall SaaS spend increased by 1.7%.

Software Spend Categories**

We analyzed which software categories were growing and which were shrinking. Design and Customer Success software showed the biggest year-on-year increase in spend:

In March 2023, the SaaS market experienced varying growth rates across different categories of applications compared to March 2022. The most significant growth was in the Design category, with an impressive year-over-year (YoY) increase of 146.26%. Customer Success followed as the second fastest-growing category, with a 107.24% YoY growth.

Other categories with notable growth include Dev Ops at 77.85%, Analytics at 60.45%, HR at 55.66%, Sales at 47.30%, IT and Security at 41.91%, and Marketing at 36.59%. However, not all categories experienced growth.

The Developer category showed a moderate increase of 15.53%, while some categories experienced a decline in SaaS spending. Productivity applications had a -16.15% YoY change, Finance applications saw a decrease of -23.47%, and Operations had the most significant decline, with a -43.65% YoY change.

Overall, the SaaS market in March 2023 demonstrated growth in categories like Design and Customer Success, while some areas, such as Operations and Finance, faced challenges and decreased spending compared to the previous year.

Top 10 New Software Applications for March 2023**

Cledara continues to see our customers adopting new tools in high-value areas. Here are 10 new SaaS applications that Cledara customers used for the first time in March:

Four of the top 10 new tools in March are AI tools. Richard Gargan, analyst for Cledara, said:

“As the SaaS market continues to grow, the recent increase in software spend, particularly in AI-driven solutions, demonstrates the growing reliance on cutting-edge digital tools to stay competitive in today's business environment.”

Up Next**

Cledara continues to monitor software spend trends each month. Stay tuned for our next report on software spend for April 2023, coming out in May. Subscribe to our newsletter to be notified when we release this report.

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Methodology**

For software spend analysis, Cledara looked at a sample of 118 companies, representing 36,000+ SaaS transactions.

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