Key Takeaways
- • AWS dominance in cloud infrastructure: 87% of surveyed private SaaS companies use third-party application delivery predominantly, with approximately three-quarters of those selecting AWS, signaling a structural shift away from self-managed servers across the industry.
- • Sixth annual benchmarking survey: KBCM Technology Group (formerly Pacific Crest Securities) and the survey publisher released Part 2 of their 2018 private SaaS company survey covering 157–245 respondents, providing critical performance metrics on operations, cost structure, contracting, retention, and capital requirements.
- • Self-managed infrastructure declining even among large vendors: Only the largest and oldest SaaS companies maintain significant reliance on self-managed servers; even these legacy players increased AWS usage substantially year-over-year, indicating accelerating cloud migration across all company sizes.
- • Comprehensive operational benchmarking data: The survey captures subscription gross margins, application delivery modes, and organizational metrics segmented by company revenue ($5MM to >$40MM), enabling direct peer comparison across multiple operational dimensions.
- • Multi-year trend validation: Survey data spanning 2014–2018 demonstrates consistent migration toward third-party infrastructure providers, with respondent bases ranging from 245 to 384 companies annually, establishing robust longitudinal evidence of industry infrastructure preferences.
Summary
The 2018 Private SaaS Company Survey Part 2, released in partnership between the publisher and KBCM Technology Group, represents the sixth consecutive annual assessment of private software-as-a-service company operations and benchmarking. The survey encompasses detailed analysis of 157 to 245 respondents depending on specific metrics, capturing operational, financial, and strategic dimensions critical to institutional investors evaluating SaaS market dynamics.
Cloud infrastructure adoption has reached near-ubiquity within the private SaaS sector. The survey documents that 87% of participating companies rely predominantly on third-party application delivery platforms, with approximately three-quarters selecting Amazon Web Services specifically. This concentration underscores AWS's market dominance and reflects a structural industry shift from self-managed server infrastructure toward managed cloud services. The trend is reinforced across five years of historical data (2014–2018), showing consistent acceleration in third-party adoption despite varying survey respondent bases.
Company size analysis reveals a critical inflection point: only the largest and oldest private SaaS vendors maintain meaningful reliance on self-managed servers. Even within this cohort, AWS adoption increased substantially year-over-year, indicating that legacy infrastructure preferences are eroding rapidly. Among mid-market and smaller respondents—those generating $5MM to $40MM in revenue—third-party cloud delivery is now the overwhelming standard. This segmentation suggests that infrastructure decisions correlate with company age and founding era rather than current revenue scale, with newer entrants standardizing on cloud platforms from inception.
Part 2 coverage extends beyond infrastructure to encompass subscription gross margins, cost structure analysis, contracting and pricing strategies, customer retention and churn metrics, capital requirements, and debt financing utilization. These operational metrics, combined with top-quartile benchmarks, enable private SaaS companies to assess competitive positioning across multiple dimensions simultaneously. The survey's longitudinal design—maintained over six annual cycles—provides investors with durable evidence of SaaS operational trends rather than isolated point-in-time snapshots.
Cloud infrastructure adoption has reached near-ubiquity within the private SaaS sector. The survey documents that 87% of participating companies rely predominantly on third-party application delivery platforms, with approximately three-quarters selecting Amazon Web Services specifically. This concentration underscores AWS's market dominance and reflects a structural industry shift from self-managed server infrastructure toward managed cloud services. The trend is reinforced across five years of historical data (2014–2018), showing consistent acceleration in third-party adoption despite varying survey respondent bases.
Company size analysis reveals a critical inflection point: only the largest and oldest private SaaS vendors maintain meaningful reliance on self-managed servers. Even within this cohort, AWS adoption increased substantially year-over-year, indicating that legacy infrastructure preferences are eroding rapidly. Among mid-market and smaller respondents—those generating $5MM to $40MM in revenue—third-party cloud delivery is now the overwhelming standard. This segmentation suggests that infrastructure decisions correlate with company age and founding era rather than current revenue scale, with newer entrants standardizing on cloud platforms from inception.
Part 2 coverage extends beyond infrastructure to encompass subscription gross margins, cost structure analysis, contracting and pricing strategies, customer retention and churn metrics, capital requirements, and debt financing utilization. These operational metrics, combined with top-quartile benchmarks, enable private SaaS companies to assess competitive positioning across multiple dimensions simultaneously. The survey's longitudinal design—maintained over six annual cycles—provides investors with durable evidence of SaaS operational trends rather than isolated point-in-time snapshots.
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