Software as a service has become an essential part of how modern businesses operate.
In fact, according to BCG research, 64% of small and medium businesses now rely on cloud-based technology to drive growth and boost their productivity. Additionally, 88% of businesses say they are considering investing in new SaaS solutions in the next 2-3 years.
SaaS subscriptions have grown at a furious pace over the last few years, although according to Blissfully’s 2018 SaaS trends report, there was a slight slowing of subscription numbers during 2017. On the other hand, there was an increase in the amount being spent on SaaS, with companies prepared to pay up for better productivity.
With that being said, where do the trends lie in SaaS? It’s important to understand where momentum is headed before making any kind of commitment to investment. Here are some SaaS trends of 2018:
#1. Biggest department spenders
Unsurprisingly, engineering teams, as the pioneers of SaaS, have been the quickest departments to adopt it and still lead in terms of spending. However, according to the Blissfully report, Business Operations is now right up there with engineering in terms of spend and number of subscriptions.
Among Business Operations teams, the most popular apps are GSuite, NetSuite and Slack. All of these are well-known for ease of use and ability to streamline business processes.
The next two biggest spenders on SaaS are DevOps and Marketing. On average, large companies are spending about $186,000 per year on 20 different subscriptions. This is important information to understand if you are wanting to invest in or develop enterprise level SaaS.
#2. The emergence of PaaS
PaaS (platform as a service) has been a logical development as SaaS have matured. Once SaaS reach a certain level of maturity, they look for more ways to improve customer retention so that less focus on acquisition is required.
PaaS means that companies expand their original product and allow their clients to choose add-on services or apps.
They can also use the PaaS as a basis to run apps without the inconvenience and various hassles associated with maintaining on-premises hardware or software infrastructure. Increasingly, enterprises are looking to PaaS for their simplicity and scalability.
Salesforce is an example with their Lightening platform. As they put it:
“PaaS provides a huge benefit for companies adopting a microservices architecture, since PaaS allows for each microservice to be deployed and managed faster. PaaS is especially helpful when microservices are built using several different language and frameworks.”
With SaaS popularity exploding in businesses as a solution to a range of problems, it’s worth considering how those SaaS will work together to form the greater whole that is the work environment. As Blissfully put it:
“You have to consider how certain tools get along (or don’t) with other tools. You need
to look for ways to streamline tech-heavy workflows. You need to ensure you are
meeting security and compliance requirements and responsibilities, and treating
customers’ data with the level of respect and sensitivity it deserves. You also need to
ensure you are optimizing both operations and spending around SaaS tools, so that
proliferation doesn’t equal waste.”
#3. Mobile SaaS
Did you know that of small business owners, nearly half use their smartphone as the primary device from which to run their business? While Warren Buffett (and others) might still prefer flip phones, there is widespread adoption of smartphone use among larger companies and senior executives too.
We’ve become used to Skyping while on the go, checking Slack while in transit and generally getting tasks done on mobile. This has placed increasing demand on SaaS to deliver on mobile. While many began life as web or native apps, there has been an expansion to offer a similar experience on mobile. Some companies have even taken a “mobile first” approach.
A Neumob white paper put it this way:
“The continued trend toward the mobilization of virtually everything is fast converging with a profound surge in the adoption of software-as-a-service (SaaS) applications. The impact of Mobile-SaaS convergence is that organizations of all sizes are leveraging new, critical mobile applications that maximize employee productivity and spur business growth.”
One of the big challenges for SaaS is to truly deliver a mobile experience that is in line with, or better than the web app experience. A common complaint among SaaS clients is that they can’t do on the mobile app what they can on the web app, or the app performance is questionable. If your SaaS lies within a competitive vertical, there may be an opportunity to ensure that your mobile experience delivers better than others.
#4. Artificial Intelligence and Machine Learning
Artificial Intelligence (AI) and machine learning are set to play a more disruptive role among SaaS. Oracle is currently the world’s second-largest provider of SaaS apps, behind only Salesforce. Earlier this year, Oracle announced significant investment going into “AI infused apps,” a move is seen by many as a push to take over the top spot from Salesforce.
“Oracle is also intently committed to its new breed of “adaptive intelligence” applications that, by design and definition, create continuously better and more personalized experiences for users because their AI and machine-learning components enable the apps to learn as they’re used.” (Forbes).
As the cost of implementation for AI and machine learning gets lower, it is expected that more SaaS will incorporate it into their products, AI is, after all, about leveraging data, and data analysis is a key area of SaaS technology. We’re already seeing AI incorporated in the form of chatbots in many cases, so increasing intelligence abilities may be the next big competitive area for SaaS.
#5. Standalone features
By their nature, SaaS are flexible systems that allow users to combine features or add-ons in a number of different ways. SaaS vendors are often able to add new features relatively quickly, another advantage that they have over on-premise packages.
In 2018, this might even mean reducing the massive size of some SaaS options to allow for the use of standalone features. Here’s how Sebastian Lambert of Finances Online put it:
“In 2018, outdated product marketing strategies will very likely be replaced by new-age feature marketing ones, all in the service of efficient targeting and customer engagement. Systems will become more flexible and open to all sorts of custom manipulations, probably letting companies build up personalized apps on a common basis, and at a fraction of the price. Better yet, open API architectures will enable connectivity against minimal coding, which will more or less mean that any app can work in any software ecosystem. Once the time to upgrade has come, managers will be relieved from investing scandalous amounts in profy versions they don’t need, as they can pick the exact functions they want, and build up their own offering.”
While SaaS in 2018 isn’t slowing in terms of growth, there is a new sense of maturity and developing opportunities, particularly among enterprises.
Research data shows that large companies are eschewing traditional, on-site software and hardware packages to invest in SaaS. They’re devoting considerable budget to the investment and expect to be able to streamline their operations as a result.
SaaS vendors can benefit by keeping up with emerging trends and understanding where opportunities are likely to head. AI and machine learning is an example of one that is getting increasing traction. As the technology becomes less costly to implement, more SaaS are likely to be jumping onboard.
What can you do to ensure you’re not left behind?
Koombea builds innovative technologies for companies. Talk to us about how we can help you today.