How Optevia Will Help IBM Access Fastest-Growing Cloud Space
How Optevia Acquisition Will Boost IBM’s Strategic Imperatives
CRM is the largest component of SaaS
Previously in the series, we discussed IBM’s (IBM) latest acquisition, Optevia. We also discussed how Optevia’s acquisition will not only provide IBM with a new avenue of revenue growth but that it will also allow IBM to be part of the fastest growing space in the cloud.
Apart from IBM, IHS (IHS), Blackberry (BBRY), and Accenture have also been drawn to the UK market. It’s the rapid growth expected in the CRM and SaaS (software-as-a-service) space that has prompted IBM to pursue Optevia. In this article, we’ll discuss the growth expected in the SaaS space, of which CRM is the largest component.
SaaS is expected to be fastest-growing segment of cloud
According to the Cisco (CSCO) Global Cloud Index, SaaS is expected to be the fastest-growing cloud service segment through 2018, as the above presentation shows. SaaS is expected to grow at a compound annual growth rate (or CAGR) of 33%, whereas the cloud market as a whole is expected to grow at a CAGR of 24%.
CRM is the largest component of SaaS, which explains Salesforce’s continued double-digit revenue growth. If we look at Gartner estimates, though the CRM software market is expected to grow only at a 14.8% CAGR (compound annual growth rate) by 2017, SaaS CRM is expected to grow at 22.6%.
It’s Salesforce’s dominance in the CRM space that made it a potential target for Microsoft (MSFT) though the acquisition did not happen. Salesforce leads the CRM and SaaS space.
Investors interested in gaining exposure to IBM can consider investing in the SPDR S&P 500 ETF (SPY), which has an exposure of 8.7% to application software and invests ~0.7% of its holdings in IBM.
Browse this series on Market Realist:
