Why SaaS Is The Future?
The cloud is the future. It’s been said before, but it’s worth repeating. By 2025, Gartner predicts that 90 per cent of organisations will be using some form of cloud services.
Why the big move to the cloud? There are plenty of reasons. One is the shift to Saas (software as a service). Saas delivers software, usually as a subscription-based service over the internet, eliminating the need for companies to install and manage on-premises software.
SaaS products make it easier and faster for companies to get up and running with new software in many different ways, including the rapid rollout of new features and more versatile payment models. Keep reading to learn more about why SaaS is the future and why you should adopt it as part of your business strategy.
Key Characteristics of What Make SaaS so Popular
To understand why SaaS is important to businesses, you should know more about the characteristics of SaaS that make it so appealing, not just as a technological achievement in cloud services but also as a profitable business model. Here are just a few reasons behind the growing popularity of SaaS.
Flexible Payment Options
By using SaaS, a business can forego the expense of new software and the hardware infrastructure to host it. Instead, the SaaS vendor will provide a variety of pricing models to give the business flexible payment options and ensure they only pay for what they need.
SaaS Solutions are Scalable and Adaptable
SaaS products are scalable, accessible, and more adaptable to changing market conditions than on-premises IT infrastructure and software. SaaS products can also be location independent, meaning employees can quickly transition to becoming remote workers as the need arises.
Greater Collaboration Potential
SaaS solutions make it easier for a company to promote collaboration across teams and departments due to enhanced file sharing and the ability to onboard team members into the same ecosystem.
Excellent examples of this capability include Google Docs and Microsoft’s SharePoint service. Both implementations enable near instantaneous collaboration between parties during document editing. Monday.com’s CRM feature includes up-to-minute data logging, giving customer-facing team members the latest lead and customer interaction updates to deliver a more streamlined and satisfying customer journey.
Enhanced Security
Data security is a primary concern for many businesses considering switching to SaaS services in the cloud. However, SaaS solutions often utilise cloud servers from well-established providers like Microsoft Azure, Google’s Cloud Computing Service, and Amazon’s AWS.
Each of these providers has significant security protocols and a team of around the clock security professionals that make it much more difficult to gain unauthorised access to data. Small businesses that host and manage on-premise servers make more appealing targets to modern cybercriminals.
The volume of resources available to these cloud provider companies also ensures multiple redundancies are built into the system should a server go down or a storage medium fails. A disaster recovery plan is much easier to implement when your data and software are hosted in the cloud and much less likely to occur.
Considering the above characteristics of SaaS business processes, it’s not surprising to see why the SaaS market is currently booming and will continue growing. Since 2010, Saas uptake has been on an upward trend year on year and is expected to become an almost $400 billion industry by 2022.
The State of The SaaS Market
As we mentioned, the SaaS market is one of the fastest growing business models. It is only getting bigger, with almost 40% of companies stating they run almost entirely on SaaS and 80% of businesses reporting they intend to be 100% SaaS operated by 2025. Here are a few more numbers showing that the future of SaaS is bright.
- SaaS spending is forecast to increase to $500 billion by the end of 2023
- Almost 90% of companies using SaaS say they retain more employees for longer
- 99% of businesses already use at least one SaaS solution
The current SaaS growth rate is phenomenal, with interest increasing globally. Ninety-eight per cent of UK businesses use a cloud service, and 90% of companies in the Asian and Pacific regions report they have plans to implement SaaS business models into their business processes. Australian businesses spent $4.6 billion on cloud services in 2018, with the bulk going to SaaS products.
The current annual growth rate of SaaS is 18%, and it was one of the few industries to grow during the pandemic. Market growth for SaaS is related to its improved capabilities over on-premise software, its low barrier to entry, scalability, and enhanced accessibility.
Why More Companies are Adopting SaaS
Most companies are adopting SaaS as the main arm of their digital transformation strategy because of its inherent agility and scalability. Almost 40% of businesses reported a desire to improve their disaster recovery methods, and 37% stated that SaaS is the most efficient way to enhance flexibility in a rapidly evolving marketplace.
Who is Using SaaS?
More and more executives prioritise greater portions of IT budgets for SaaS solutions that make their businesses more flexible, competitive, and secure. What industries are responsible for the burgeoning interest in SaaS?
- 50% of US government organisations use cloud services
- 99% of all businesses have at least one cloud solution
- Almost 70% of enterprise companies classify themselves as either intermediate or advanced users of SaaS technology
SaaS Industry Trends Fuelling Growth
The statistics have revealed that the SaaS industry is on full steam ahead and only picking up speed. More and more organisations are leaning towards SaaS as a versatile alternative to on-premise solutions. Let’s look at a few of the trends that are helping to accelerate cloud adoption.
Artificial Intelligence
Artificial intelligence (AI) is more widespread than ever and increasingly appears in many SaaS products.
Grammarly is one of the better-known solutions using behind-the-scenes AI to create a more advanced grammar and spell checker than anything else on the market.
The advanced spell checker has been helping people in all industries communicate better by using Grammarly’s AI to suggest a better way to say things or set just the right tone for a particular audience.
AI is also helping businesses use their data to learn more about their market and audience. With the vast amount of online data collected about how leads and prospects behave online, AI can analyse large volumes of analytical data in minutes versus the days or weeks human operators would need, without human error creeping in and causing discrepancies.
AI applications in SaaS can be highly specialised to help medical staff diagnose patients, accelerate new product development, reduce customer acquisition costs, improve customer retention, and automate complex or tedious tasks.
An AI algorithm combined with an advanced neural network delivers fantastic business opportunities and unprecedented control over day-to-day business processes. Anomaly detection, pattern recognition, and machine learning can alert departments to emerging trends to quickly take advantage and retain a competitive edge.
Human eyes monitoring a variety of KPIs can easily overlook vital details. AI in SaaS solutions will never lose track of what matters so businesses can get the maximum value out of their data, improve security, and be a valuable addition to human intuition.
How AI is Shaping the Future of SaaS
There are numerous ways AI is helping to create a bright future for SaaS. Here are just a few ways AI will transform how businesses use SaaS solutions.
Data Intelligence: AI’s superior ability to analyse large volumes of data means it is easier to spot emerging trends, improve customer interactions, predict future outcomes from historical data, and determine the most efficient solutions for delivering value.
Improve Cybersecurity: AI’s ability to quickly scan millions of files and monitor data streams can significantly increase cybersecurity by instantly recognising incoming threats and implementing protocols to thwart them. Antivirus software is an excellent consumer-level example of SaaS that uses pattern recognition to quarantine possibly harmful files before executing and compromising the user.
Personalisation: As more and more commerce moves online, customers will still demand and expect exceptional customer service. Technologies like natural language processing can reduce a department’s workload as it automatically processes human speech to deliver automated but highly customised solutions to prospects, leads, and customers.
Vertical SaaS
Vertical SaaS will see greater levels of adoption as it offers streamlined solutions to specific supply chains and industries. For example, a CRM (Customer Relationship Manager) like SalesForce or Slack are examples of horizontal SaaS applications that solve particular problems not confined to a specific industry. A vertical SaaS solution is not created to work across various sectors. Instead, it will focus on a specific challenge, such as managing virtual events or monitoring supply chains in the manufacturing industry.
Centralised Analytics
One of the fastest growing sectors of the SaaS industry is the data-driven analytics sector. As more businesses undergo digital transformation, they look for ways to streamline their data analytics capabilities to get deeper insights into customers’ and users’ behaviours. This growing need to quickly analyse significant volumes of data is driving investment in the SaaS analytics sector to record heights.
Many industry experts expect analytics-focused SaaS demand to grow by more than 23% just this year. Most SaaS tools will utilise some form of business intelligence for making data-driven decisions that will ensure they maintain their competitive edge.
In addition to the benefits of a centralised SaaS model, it will also allow employees access to data from any device wherever they have internet access.
Business Benefits of SaaS
Now that we understand why Saas is the future of the software industry, what benefits will it provide to a business that adopts SaaS models as part of its digital transformation?
SaaS is Accessible
Traditional on-premises software is challenging to access remotely. Servers are costly to run and maintain and require experienced IT professionals to manage complex networks. In contrast, SaaS tools running in the cloud are much more accessible.
And because the applications are running on a cloud provider’s powerful servers, employees can access the applications using modest, affordable hardware or mobile devices.
The remote device becomes not much more than a dumb terminal. The actual CPU work is handled remotely, while the local device’s primary roles are sending the inputs and displaying the results.
SaaS Updates are Straightforward and Accessible
Upgrades and updates in the traditional on-premises software model create significant bottlenecks and disrupt business continuity. Broadband internet speeds have made upgrading software much more manageable by eliminating the need for physical copies, but upgrading hardware can often introduce significant downtime and complex challenges. This is on top of the costs of purchasing new equipment and disposing of the old.
Because SaaS models are hosted remotely, updates and new features are instant from the subscriber’s point of view. There are no patches, updates, or new versions to install as the vendor handles everything through the remote data centre.
SaaS is Scalable
A traditional software provider does not have the scale available to SaaS vendors. Developing all the features for a complete and finished product is challenging and expensive. Once the product goes to market, sourcing a continuous stream of prospects and leads to generate paying customers can be a massive drain on resources.
SaaS delivers advantages over other distribution models for enterprise applications. SaaS developers can rapidly get a minimum viable product to market (MVP) with only the most essential features requested by customers.
Onboarding customers to the MVP will generate an income stream to fund further development and add new features. A loyal customer base can also be a valuable resource for market research that can help SaaS developers with valuable input to help develop a roadmap for the future and ensure your product continuously evolves to meet market demand.
Manage Your Business, Not Your Software
SaaS products hosted in the cloud mean that managers can get on with doing what they do best, which is running their business. The cloud service provider manages the IT infrastructure, and the SaaS vendor or development team handles all the minutiae necessary for delivering a stable product to the customer base.
SaaS is the Future – Here’s How Flying Donkey Can Help
There are many advantages for a business adopting SaaS technology as part of a digital transformation program. Flying Donkey is perfectly positioned to provide a complete development team for your SaaS product or augment your existing team with extra skills and experience.
