KBS - Software-as-a-Service - Market Insight

MARKET INSIGHT

Since 2020, the software and software-as-a-service (SaaS) sector has evolved from a period of rapid expansion to a more stable, performance-driven market.

The pandemic years saw a surge in demand as businesses moved online, but subsequently investors have become more selective and are focusing on companies with strong recurring revenues, loyal customer bases and clear profitability. High-quality businesses with steady growth and healthy margins continue to attract strong buyer interest. A major shift has been the rise of artificial intelligence (AI), which is transforming how software products are developed, delivered and priced. AI is now being built into everything from workflow automation to customer service tools, creating opportunities for innovation but also driving consolidation as smaller firms struggle to keep pace.

Products & Services Segmentation CRM System Providers in the UK Industry revenue in 2025 broken down by key products and service lines.

Software as a Service (£2.1bn) 71.3%

Software as a Product (£696.0m) 23.5%

Other services and fees (£154.0m) 5.2%

Source: IBISWorld

Looking ahead, the market is expected to remain highly active, with strong interest in SaaS platforms that serve specific industries, deliver measurable efficiencies and demonstrate reliable subscription-based income.

Larger technology groups and private equity investors are likely to continue acquiring to gain access to new technology, recurring revenue streams and established customer relationships — particularly where AI integration enhances long-term scalability and value creation.