by Noel Jerke (Author)
Businesses today will find it very hard to stay afloat in most markets if they don’t use cloud-based technology. With SaaS platforms and solutions, many organizations are now able to streamline their operations, integrate technology into their daily running, and even preserve a remote workforce.
If we want to utilize the full potential of SaaS today, we need to understand this technology. The platforms have now become very affordable and accessible for most sectors of the economy. With lower barriers to entering global markets, this is the time to understand digital transformation. By utilizing SaaS platforms in the right way, we can end up having much more efficient business operations and excellent customer experiences.
Chapter 1: What
The acronym SaaS stands for ‘Software as a Service’. Basically, this is where a service provider hosts certain applications of software in order to make them useful and accessible for their clients. One of the best examples of SaaS is Microsoft. If a service process relies on infrastructure belonging to some other cloud provider, they are called ISVs or independent software vendors.
SaaS is one of the main branches of cloud computing in general. Generally, we can find SaaS apps very easily. They might even define the future of how we use the internet.
If we look at SaaS for the purposes of delivery, it can benefit a lot of businesses. The current market situation is such that cloud-based services and solutions are necessary for staying afloat. Just a few of the major benefits of SaaS include:
- Ability to access from different locations and devices
- No maintenance or installation required
- More environmentally friendly
- Significant reduction of manual errors and duplication of data
- Personalized experience for the customers
- Faster launches
SaaS is now available to businesses of all sizes; from the humble startup to a booming corporation. Most SaaS apps are compatible with several kinds of devices, including smartphones and tablets. As long as we choose a reputable service provider and vendor, we can count on them to take care of hosting the app and making sure it’s operational.
Single and Multi-Tenant SaaS Architecture
With single-tenant SaaS, there are dedicated resources, infrastructure, and servers to support the service. These are developed just for certain clients who want to customize the services as they see fit. While there’s a higher monetary cost, the upsides here include more security, reliability, easy backup, etc.
Multi-tenant SaaS apps are those that serve several users at a time. While these users may not be able to customize anything, such apps are affordable options for medium or small businesses. The costs are lower, resources are efficiently utilized, and there’s a bigger computing capacity as well.
Other cloud-computing categories include Platform as a Service (PaaS) and Infrastructure as a Service (IaaS):
SaaS Apps: Better for businesses or anyone who wants to start quickly with a ready-made infrastructure. Also a good option for apps that aren’t used too frequently, such as one for calculating taxes.
PaaS: These are for developers who want to test out their apps. They can do so without the hassle of building up any infrastructure or operating system from scratch.
Iaas: This is mostly for companies who want computing resources for self-service. In a nutshell, their clients rent or buy the resources when they need them. They get control over the computing and infrastructure without having to make it themselves. This sort of service is mostly for huge businesses who want to be in control over their data.
Chapter 2: When – History, Current and Future Trends
SaaS actually started with the age of the floppy disks. This was when Concur was the pioneer of the software delivery channels, letting go of most physical software after 2001. With faster internet and other technological advancements, SaaS also evolved to make more useful solutions for businesses.
In 1961, MIT introduced the concept of time sharing computers. This had terminals connected to the mainframe computers, without their own CPU, thus giving efficient power to large organizations such as universities and government agencies.
Eventually, the size of computers decreased as well as their cost. Even though SaaS systems were still text-based, they were getting much more popular.
1980s-1990s: Before SaaS
This was the era where having a personal computer was accessible for the common man. SaaS developed according to this new situation, using LAN to allow users to access the central systems and their data. Large corporations could hire professionals for setting up the networks and conducting administrative duties. For small to medium business, though, lack of understanding caused a loss for many setups. The network managers would be overworks, poorly paid, and often without the required equipment.
A breakthrough occurred when the first credit card transaction took place in 1994. The development was rapid from there on; just a few months later, businesses and their end users were able to communicate and exchange information on the internet. This directly led to giant service providers like Amazon.
Since so many PCs come with bloatware or bundled software such as Microsoft Paint, etc., storage space was always an issue. With SaaS, businesses realized that they didn’t have to use their computer storage for storing all their information anymore. With SaaS options like DropBox, this service was deemed even more successful than Application Service Providers (ASPs).
Concur is known to be the first SaaS provider; it started with floppy disks and CDs, and was bought by SAP in 2014 for a record amount of $8.3 billion.
The SaaS market did stagnate for a while due to the COVID-19 pandemic, but this pause didn’t last much beyond 2020. Now, experts say that the growth of SaaS will continue to be upwards.
SaaS Industry Trends
These trends will probably shape the SaaS sector in the coming days/years and already have an influence on the computing industry:
- Artificial Intelligence: This includes self-driving vehicles, chatbots with deep learning abilities, and other ways to enhance security, personalized services, etc.
- Machine Learning: Similar to AI, but with more innovation expected in the future; users will be able to train software to learn from ongoing interactions, tasks, communication–this will automate more business operations.
- Vertical SaaS: Customizable solutions for clients in various industries
- White-label SaaS: The development of complete software for selling to other vendors–this especially helps small businesses
- Micro-SaaS: Small innovations from teams becoming add-ons in the SaaS to improve existing features
- Centralized Analytics: Helps businesses gain insight into their own operations
- APIs, Integration Capabilities: Software intermediary that allows connection between different applications
- Low-code or No-Code Capabilities: allows developers to focus on adding value and innovation to a small company or startup
- Migration to PaaS: users build apps on the existing platforms instead of coding from scratch
- Enhanced Mobile Optimization: A necessity for businesses today; their website/app should be accessible via mobile devices
Chapter 3: Who
Who are the Biggest SaaS Industry Players?
Some SaaS companies might have a rapid growth rate, while others offer many other services as well. This makes the categorization of these industry players more difficult. Here are the top SaaS-focused companies for now:
- Adobe ($266 Billion)
- Salesforce ($248 Billion)
- Oracle ($244 Billion)
- Intuit ($175 Billion)
- Shopify ($173 Billion)
- SAP ($165 Billion)
- ServiceNow ($125 Billion)
- SnowFlake ($108 Billion)
- Atlassian ($96 Billion)
- Square ($78 Billion)
- Autodesk ($61 Billion)
- Zoom ($60 Billion)
- Twilio ($50 Billion)
- Workday ($70 Billion)
- Veeva ($40 Billion)
- HubSpot ($31 Billion)
- Cloudflare ($44 Billion)
Impact of SaaS
SaaS platforms are now dominating the sector of cloud services, especially in the fields of engineering, finance, and government:
Government: Agencies in the United States have a mandate for using cloud-based services, with the government planning to move certain important services to the cloud
Education: The recent COVI-19 pandemic became a trigger for using SaaS in the field of education; the solutions are scalable, affordable, mobile, and accessible for most
Finance: SaaS offers flexibility, automation, collaboration, and other benefits
Engineering and Manufacturing: for scheduling and planning
Healthcare: EMRs, R&D, billing, and telehealth among other services
Hardware as a Service
SaaS has also impacted the hardware sector, mainly by taking on a lot of the burden for data storage and management. Now, businesses can access apps instead of paying for and maintaining servers of their own.
HaaS is the practice of renting hardware, meaning that the user can pay for the services rendered by powerful computers and GPUs. This allows them to avoid the large costs of buying and maintaining the hardware themselves.
SaaS for Backup
SaaS vendors also provide backup, upgrades, and maintenance. Not every business can follow all the complicated rules of data retention. With automated backups, businesses can stay compliant and secure their data easily.
Chapter 4: Where
The market size for SaaS has doubled in 2020, experiencing exponential growth due to faster internet, more demand, less costs, etc. After the onset of the COVID-19 pandemic, businesses are even more eager to streamline their costs, establish remote work, etc.
Horizontal vs. Vertical SaaS
Horizontal SaaS is when solutions have larger target audiences from varying industries. These are popular solutions and include Microsoft Office 365, QuickBooks, and Salesforce.
Vertical SaaS is more about the customized needs of specific users. The financial cost of these solutions for the users is also higher.
On Top SaaS
This is a relatively new concept dealing with targeted or industry neutral software that can integrate with current conditions. This way, the vendors can use the SaaS platform without having to build their own. Examples include Zapier and Veeva.
B2B vs. B2C SaaS
B2B solutions are for certain businesses with specific requirements. Businesses may buy them and rebrand to sell further.
B2C refers to software that provides general solutions for the public. The most famous example of this is Office 365.
Most Popular SaaS Solutions for Businesses
- Customer Relationship Management Solutions (CRMs): Hubspot, Zendesk, Microsoft Dynamics 365
- Finance, Accounting and Billing
- Human Resources (HRMS): Freshteam, Zenefits, BambooHR
- Project Management (PM): Monday.com, Clarizen, Teamwork, Zoho Projects
- Communication and Collaboration: Zoom, Clickup ,Trello
- Content Management Systems (CMS): HubSpot CMS, Magento, Drupal
- Enterprise Resource Planning (ERP): Oracle NetSuite, Sage X3, Acumatica
Basically, growing businesses need to shift to cloud-based computing if they want to survive in today’s cutthroat industries. Those who still haven’t may want to start planning for the jump as soon as possible.
Chapter 5: Why
There are pros and cons of SaaS, though the benefits far outweigh the costs in most situations. For businesses working with SaaS or considering taking this step, a general understanding of this service is important.
Benefits of SaaS
- There’s no limit of devices or location
- Businesses save a lot of money and hassle
- Low upfront costs
- High scalability and flexibility
- Automatic updates without manual maintenance
- Compatibility across platforms
- App integration that minimizes duplication of data, errors, and manual work
- Very adaptable and user-friendly
- Service Level Agreement for setting expectations and guarantees
- A safer option that having software and data in one spot on the physical promises
- Encouragement of innovation and specialized products
Drawbacks of SaaS
- Requirement of an active and speedy internet connection
- Limit on control of the processes
- Some security issues
- Need to educate employees
- Possible compliance challenges
- Limited functionality with certain apps
- Contractual obligations
- Difficulties in migrating data to other providers
- Limited customization potential
Chapter 6: How
SaaS is becoming a part of most modern businesses, influencing almost every major area within an organization. Some of these areas include:
- Talent management
- Tracking performance
- Customer services
- Predictions of customer behavior
- Marketing and sales
- Demand-driven planning
- Supply chain management
Marketing SaaS Products
It’s not easy to market SaaS products, so such companies have to develop a unique marketing strategy according to their target industry. The marketing here has to develop consistently in order to keep customers hooked.
Marketers for SaaS need to establish innovative thinking, especially as the products have multi-stage, extended cycles. Customizers may need demos to understand how a certain new solution helps them more than the current one.
Competition and Pricing
There are several thousand SaaS solutions available, with pricing being a major factor in staying competitive. Companies should focus on clear pricing with all the details in order to ensure a customer.
SaaS Marketing Strategy and Marketing Channels
A small or new SaaS company will focus on establishing their credibility and making their brand known to their audiences. Those that are emerging will focus more on optimizing their marketing channels. It’s essential to generate organic site traffic, which may require:
- Content marketing
- PPC or Paid search
- Intelligent referral marketing
- Industry exposure
Selling SaaS Products
Here are a few tips for selling SaaS products:
- Limiting options or customers to keep things simple and avoid confusion
- Transparent pricing to avoid frustrating customers in the future
- Free trials or Freemium to allow customers to test the product
- Best possible user experiences, including social media, customers support, and the software performance
- Making it easy to sign up so that the customer doesn’t go to the competitors
- Offering special discounts and deals only occasionally
- Qualifying leads
What to Consider When Signing Up
While SaaS might be a leveling factor for many businesses, it’s important to understand the following factor in order to utilize it properly:
- Understand Your Needs: does the business just want to minimize costs or prioritize easy collaboration?
- Scalability, Flexibility and Exit Strategy: the business should ensure that the provider can scale up after growth and stay flexible; they should ideally be able to switch to another provider without much hassle.
- Security and Back-up Plans: get security certifications such as SOC 2 and see what the vendor’s security infrastructure is like
- Technology & Platform: These should complement the business; existing setup
- Data Governance: look into the control of data processing, storage, and management
- Customer Support and Availability: The service provider should properly help out with any issues
SaaS Pricing Models
SaaS subscriptions are usually more flexible than with other products. There’s no one standard pricing model, resulting in businesses choosing according to their budgets and needs.
- Per-User Pricing: The costs reflect the user numbers, all features are included, and budgeting is a bit easier (better for small businesses)
- Per-active User Pricing: preferred for larger companies, avoids waste of money, and makes software rollout easier
- Usage-based Pricing: Good for companies where the user patterns are not easily predictable; minimizes entry barriers and is easily scalable
- Tiered Pricing: Hybrid model for flexible packages; serves different specific needs
- Functionality-based Pricing: beneficial for businesses who want to choose their options and features
- Customizable Pricing: Users can customize their piercing model and its features
- Flat-rate Pricing: On an annual, quarterly, or annual basis; not very scalable
- Freemium: Offers basic services at a low price or for free; includes ads and functionality is limited
Today, SaaS solutions are allowing businesses to focus more on their work and innovation rather than wasting time or resources on cumbersome data handling. It’s possible to customize SaaS solutions, though small businesses usually save money by going for existing, pre-made offerings.
AI and the Internet of Things are also now growing more popular, so we may expect SaaS to be the norm in the near future. It’s not just about the IT sector anymore; all kinds of businesses now want and need SaaS solutions that include machine learning, AI, and more.
The next digital revolution is probably already in progress, with SaaS being one of the leading shaping concepts. While utilizing this technology is important, understanding it properly and utilizing its updated offerings is even more essential if businesses want to keep up with their growth.