The Future of SaaS
What Is SaaS Business Model
Digital tools and services for businesses allow facilitating the companies’ work and make communication with clients far more effective. However, the development and support of the software are quite costly and labor-intensive operations. You will need skilled professionals in the team to upgrade the functionality. In this article, Qubit Labs will focus on one of the most far-reaching business models, SaaS.
To solve the issue of constant expenditures, you can consider SaaS business models. This implies cooperating with the software owners when the software acts as a service, and the owner is a provider, which independently provides services. A SaaS platform involves getting access to the app’s functionality via the Internet by using a paid subscription. Usually, the software is on the developer’s server, which assures the app’s workability and regular updates.
In other words, the answer to “what is SaaS business model” is that this cloud solution is provided to you as a service, so you don’t require to take care of the development process, administration, protection, information backup, and further maintenance. Most companies use at least one form of SaaS in their business, so this solution is one of the most common cloud software forms.
The SaaS model is like a reflection of the common tendency, known as “do your thing.” This means that all the company’s capacities are focused on the core business tasks, while secondary objectives can be transferred to the providers that can deliver the necessary services.
SaaS is a great way to deal with hidden expenditures, like buying, deploying, and supporting software. When applied correctly, SaaS business models can speed up business processes, which will bring additional competitive advantages and become a useful tool for the company’s advancement.
What are SaaS advantages?
- A favorable cost. It is much cheaper to pay a license fee for using apps of this type compared to the price for the development and maintenance.
- Quick deployment. Since the software doesn’t have to be installed and configured on separate computers, you can deploy it much faster with SaaS.
- Accessibility. To get access to the SaaS application, you only need a browser and Internet connection, which allows you to log into the system from any place. Besides, the cloud’s data isn’t connected to a certain user’s computer, facilitating access for other people.
- Updates. Software at the server can be updated remotely, in contrast with the traditional model, in which you have to implement upgrades for each computer individually.
- Time-effectiveness. You only need a couple of days to teach the employees and integrate the service.
What is a vertical SaaS?
A vertical SaaS is a group of program solutions that serve the niche industry requirements. Companies that focus on this group handle various needs of a single sector, like banking, healthcare, or retail. A vertical SaaS can be developed for addressing a single issue or multiple business problems; yet, regardless of the model, all the companies of this type are targeted at the specific market. This model, in contrast with horizontal analogs, utilize more conservative approaches to marketing.
This solution allows the providers to ensure predefined metrics, improve data governance, provide a more significant business value, and adapt to the emerging customer demands. Vertical SaS accommodates the business needs, implying more flexibility.
The examples of implementation of SaaS business models
The most obvious example of the SaaS business models adoption is Google Docs, which doesn’t require having any installments and allows working from any place and gadget. Besides, in general, Google Apps have been the drivers of SaaS promotion on the global market. Salesforce is another world-known SaaS-provider, which provides access to its own CRM-system.
Dropbox also enables users to add and store photos and files on their accounts that can be visible on any device.
Slack is another cloud-based application that provides messages’ security and is a great communication platform for the teams.
Amazon Web Services are also cloud-based, as well as Zendesk.
Saas News To Keep In Mind
- It is expected for the SaaS industry market to reach up to $164.29 billion by the end of 2022.
- Companies that want to solve problems more efficiently can bring human experts into their development processes to gather insights and make their products more personalized and intuitive.
- Embedded iPaaS is what enables SaaS startups to stand out in their niche and develop their solutions without jeopardizing the quality and connectivity.
- The main insights from SaaS trailblazers include ensuring well-designed software, providing high-quality innovation, engaging creativity, and creating relevant and accessible content for the customers.
- The SaaS market is led by Microsoft and Salesforce, with the revenue that passed the $100 billion run rate in the summer of 2019.
- 38% of the businesses have chosen SaaS over other systems.
- The expenditures on SaaS take up less than 15% of the overall enterprise spendings.
The Characteristics Of SaaS
Work via the web interface
One of the major characteristics of SaaS is that all data is stored on the providers’ servers, in so-called clouds. You get remote access to the program and can utilize it via the browser. Yet, there are SaaS, which you can buy and install on your server.
Payment for access
There are different billing schemes for SaaS. For example, you don’t buy the license or pay for the significant part of the development as for the individual solution. Instead, it’s like you are renting the service, covering for the access to the functions for a certain period. This payment is also called a subscription because it is renewable. Some SaaS provide a limited number of functions for free. You will have to pay to use advanced features; this is a freemium model, the example of which is Spotify. Most often, there are several tariffs with different feature sets.
You can shrink or expand the infrastructure resources because the consumption can vary to a great extent during a certain period. The applications can track the infrastructure’s behavior and allow implementing adjustments based on the changes.
The provider is responsible for the maintenance
This model allows focusing on the work without being distracted by the tasks associated with the software. The provider is responsible for service configuration. Besides, one is responsible for data security, smooth operation, and updates. The technical support addresses any arisen issues and provides materials on how to use the solution.
SaaS Industry Trends: What To Watch Out For in 2021
In 2020, SaaS was sought-after among businesses of different sizes, estimated to be worth $101.5 billion, more than doubling the market size compared to 2014. Many technologies are coming into play, making SaaS solutions more customized and competitive and impacting operational costs. Such business models are resilient and the vendors investing in SaaS more confident in their solutions’ stability, as confirmed by the pandemic. It is clear that cloud services have significantly impacted the global market when billions of people have started to work from home. Let’s take a closer look at the SaaS trends and see what we can expect from them this year.
This SaaS trend implies creating the product so it can be used by other people and companies, meaning they utilize it under their brands. The white label allows testing the idea while using minimal financial and time resources to see how brand recognition or customers’ loyalty will grow. Before launching their products, most companies use alien services and test the demand; if it is present, it then transfers to its own capabilities and continues using the white label license.
This trend impacts the future of SaaS by allowing companies to reduce production risks and save money on rent and hiring specialists. Startups can considerably benefit from the white label because it allows them to concentrate on marketing, vision, branding, and strategy, instead of taking care of every detail and doing everything from scratch.
It’s not a surprise that AI is shaping the future of SaaS since it is becoming a game-changer on the global market. Its expected market value is predicted to rise to $733.7 billion by 2027. AI allows for automation, taking the communications between businesses and customers to a new level. It will ensure personalization, utilizing NLP, and enhancing customization, focusing on client needs.
Artificial intelligence will speed up the processes of finding the right solutions, increasing responsiveness, and forecasting. Besides, it can eliminate the threats by quickly identifying them and recognizing patterns. This one stands out among other SaaS trends by providing you with full control, so you will be promptly notified if there are any issues. AI-powered chatbots will help to improve customer experiences. With it, you can use the data to get more impactful results, increase the security levels, and deliver personalized services. Besides, AI technologies are the catalyst for productivity and efficiency.
Leveraging ML will allow your business to become more autonomous and enhance internal operations’ effectiveness by implementing automation. The future of SaaS solutions implies focusing on personalization, like music suggestions on Spotify or video content offers on Netflix. As machine learning is an integral part of AI, by combining them, you can train your software to remember each interaction and make your solution more competitive by providing people with what they need.
This SaaS trend allows focusing on the target niche instead of serving broad business functions. It has several advantages, including customer intelligence, enhanced data management, and business worth. With it, the solutions can be adapted to the current demands and industry, considering the competitors’ offers and coming up with unique products.
Micro solutions involve creating additional or complementary tools for large products. Such add-ons, plugins, or extensions allow programmers to create valuable products without having to try to bypass tech giants. There is a handful of such tools on the market, so this SaaS trend will ensure customized software solutions to the users at a low cost.
The future of SaaS, as of many other areas as well, relies on mobile gadgets. Both business owners and employees aim for mobility, so the SaaS solutions are now launched alongside mobile apps. The focus on extending features for applications and mobile versions of the existing products will go a long way.
Downsizing of SaaS
Currently, many startups opt for offering “packages” of their core services instead of full-featured products. The solutions are in the form of an API, so if the small business needs only specific functions, the unbundling comes in handy. Compared to other SaaS trends, this one is impactful for developing internal tools.
SaaS Market Growth
The SaaS industry is likely to consistently grow over the years because more and more companies are implementing their businesses’ solutions. It bypasses other cloud services, expected to generate around $141 billion by 2022. Moreover, the SaaS market size will continue to enjoy robust growth because it is forecasted to rise at 21.4% CAGR by 2024 and reach $185,8 billion. The SaaS industry attracts more companies each year because they are looking for solutions that ensure agility and automation.
Also, rapid business changes, like companies rearranging their operations due to the pandemic, will bring benefits to the SaaS market. Besides, such solutions allow adapting to ever-changing conditions and remain competitive.
What is SaaS market size?
The approximate SaaS market size in 2020 was $157 billion. The market growth is rather low because of the global economic slowdown, yet it is on the way to recovering. Health, education, and economy (income) are expected to increase in the SaaS industry sharply. The digital transformation depends on the SaaS market size because cloud technologies can help face future threats and make the world more resilient.
Top SaaS Companies
There are many world-known SaaS technology companies that stand out for their usage of the system due to accomplishing significant goals in their markets. Before proceeding on reviewing the list, it’s necessary to address the question “how many SaaS companies are there?” Approximately the overall number of SaaS-based companies is 15,529. Now, let’s review some of the fastest-growing SaaS companies to inspire you in 2021.
The company used to have its Office programs on the desktop but has moved it to the cloud. Now, there is Office 365, which is more popular than the usual version because it offers to choose the required tools and provides additional ones, like SharePoint collaborations and Dynamics CRM.
It offers popular products, like free CRM, which has different features, like live chat and email tracking. Besides, like other SaaS companies, HubSpot provides software suites for a monthly fee, which are a marketing hub, sales hub, service hub, and CMS hub.
Google G Suite
Being among SaaS companies of the future, Google provides a set of tools aimed at collaboration and productivity. Some of these are Gmail, Docs, Calendar, and Sheets.
This is a graphics program, which gives away the creative content for free, aiming to make the core product, for example, stock images, more usable.
Amazon Web Services
The platform provides the products required for the secure and cost-effective development of SaaS. It includes all the necessary tools, like analytics, apps integration, and IoT.
Oracle Fusion Cloud Applications is a SaaS suite that includes all the necessary services that can be used as solutions for your business needs.
SaaS development can become both an additional tool for communicating with a client and an independent business solution. Cloud computing has made business tools more flexible and accessible, facilitating their work. SaaS providers take upon most of the responsibilities associated with security, performance, and maintenance. Thus, the future of SaaS will be promising because it is already one of the most secure and efficient business solutions. In case you need a consultation regarding the implementation of this system, feel free to contact us.