Brief Introduction and History: –
SaaS is an acronym for Software As A Service. The term is now a household word thanks to the paradigm shift towards digital technologies in the last decade. It is primarily a software licensing and delivery model where the user has to subscribe and pay as per the usage of the respective software.
Microsoft formerly called it “Software Plus Services”. It is commonly referred to as On-Demand Software or Software on the go.
The modern-day SaaS business model dates back to the 1960s when IBM and other mainframe providers introduced computing power and data storage for banks across the globe.
With the expansion of the internet infrastructure in the 1990s, a new breed of centralized computing was introduced called the ASPs (Application Service Providers). They helped businesses in hosing their critical business applications to reduce overheads for them. The two leading ASPs then were USI and Futurelink Corporation.
In 1999 the real disruption in SaaS happened when Salesforce came into existence with the “The End of Software” campaign. Salesforce disrupted the software industry and is a great case study of how to survive and stay on the top in the SaaS business.
So What is SaaS?
It is a software distribution model that gives the customer freedom to choose their preferred software using the internet and they do not have to own the supporting infrastructure on their premises. Since the applications are centrally hosted at a third-party location the updates and maintenance are done by the service provider. The customer has to pay a monthly or yearly subscription fee.
Variants of SaaS Solutions: –
- Vertical SaaS – These are solutions that are specifically developed and targeted for different industry verticals such as Retail, Tourism, Manufacturing, etc. They cater to the nagging pain points that are characteristic of that particular industry only. For example – Veeva a SaaS solution for the pharmaceutical industry. Similarly we at VendifyTM are working on building smart vending solutions which combine SaaS, IoT and Hardware.
- Horizontal SaaS – These solutions do not focus on specific industry niches but are industry agnostic and can be used across all business segments. For Example Quickbooks.
- Packaged SaaS – These solutions cater to specific business verticals across industries. A classic example is Hubspot. It is an end-to-end solution for marketing automation.
- Collaborative SaaS – This is meant for remote teams in disparate locations. Most importantly in the current pandemic, solutions like Slack and Asana are a great help to maintaining the productivity of businesses and keeping the employees safe.
Advantages and Characteristics of SaaS solutions: –
- Multitenant Architecture – It involves a centralized repository of resources, applications hosted on third-party vendor premises where all the intended users from different business organizations are also present. This helps the third-party service providers to service multiple clients, innovate when needed, and helps to save precious time and resources in development.
- Platform Independent – These solutions can be accessed with the help of the internet, so the users do not have to rely on specific platforms or devices. OTT apps are a great example.
- Quick Updates – The security patches, Automatic Updates, and Version updates are easy to deploy. The dependency on IT teams is over.
- Seamless Customization – Since each business entity will have unique demands and use of the applications SaaS is highly flexible in terms of customizing as per the needs and demand. The common infrastructure being used by others is not at all affected. What that implies is that SaaS providers can make upgrades more often, with less customer risk and much lower adoption cost.
- Ease of Use and Accessibility – SaaS-based applications can be accessed from any networked device without any risk or hassles of security of user data, managing privileges, monitor data use, and ensuring multiple concurrent sessions from any part of the globe.
- Cost Efficacy – Since the majority of the SaaS vendors work on a subscription-based model so it becomes a lucrative proposition for users from a Total Cost of Ownership perspective.
- Secured Transactions – According to a study by KPMG, about 30 percent of customers would stop purchasing from a company temporarily after a data breach. Security is one less thing on your plate if you choose a SaaS option. Most SaaS eCommerce providers are PCI compliant and some include even stricter data security. For example, BigCommerce is ISO/IEC 27001:2013 certified, which is an internationally recognized standard for information security.
- App Integration – SaaS applications can be integrated with other platforms and systems using APIs. This allows organizations to integrate their systems with the SaaS provider using their APIs. There is no shortage of SaaS providers, which encourages businesses to choose offerings that have better integration with other systems and leverage their existing IT investment.
- Integration Issues – When dealing with large global data sets it becomes a challenge so that the sanctity of the data is maintained across all levels of usage. For example – In retail Banking where data security and correctness are of prime importance, having seamless access from any part of the globe might be challenging.
- Hybrid Infrastructure – Creating a symphony between on-premise solutions and a SaaS application can prove to be daunting in many cases and completely defeat the purpose of having a hybrid solution.
- Integration Cost – Integrating SaaS solutions requires specific skills and expertise in IT management and deployment. This could prove to be a costly proposition in cases where the initial cost of ownership is high such as SAP.
- Access Control – Access control is another nagging issue when transitioning into the cloud. When switching over from Traditional legacy systems to cloud solutions the administrators should have complete control over user access levels but they might not have complete information about which user is having what access levels. This can sometimes jeopardize the whole operation.
- Time Constraints – Transitioning from on-premise infrastructure to cloud involves time and resources that affect business continuity and revenue.
- SaaS Pollution – There are multiple vendors with highly competitive and endorsed products, solutions, and services. This can prove to be taxing for the IT team and create impediments for the executioners in choosing which will be the right one. For example, in the team collaboration category alone there are more than 300 products from known vendors. Such a range of choices poses a problem for the IT executives also as it becomes practically impossible for them to sign up for each solution, understand trial results and then choose the right one.
- Hyper-Specialization – Every SaaS player claims that they are offering a one-stop solution but in reality that is not the case. Majority of the Businesses often have to use multiple solutions for different purposes, which leads to hyper-specialization (related to saturation).
- Right, Choice of Subscription Plan – As shared above the problem of “Too Many” and “Me Too” makes it extremely difficult to choose the most legible solution based on the needs and business objectives.
- Data Security – This is a primary concern and the biggest impediment businesses face when they opt for SaaS solutions. According to research, nearly 60% of people use the same password for most of their accounts, while many use passwords that are too easy to guess such as 123456. What this implies if hackers attack they will gain access to sensitive data. Multiple data breaches and hacker attacks on Facebook are an example.
Business Functions Where SaaS Solutions Are Mostly Used: –
According to CISCO, 75% of workloads will be SaaS-only by 2021. The majority of the SaaS solutions that businesses prefer to invest in are:
- Marketing – Automation of Marketing functions such as SEO, PPC, Social Media Management, Content Development, and Marketing, Funnel Management, Email Marketing, etc.
- Sales – CRM for lead generation, nurturing, pipeline management, Proposal Development, and Contract Management, Customer Service.
- Finance – Billing, Invoicing, Preparation of Balance Sheets.
- Project Management.
- Data Collection, Management, and Analytics.
The Latest Trends 2021: –
- Growing Adoption of Analytics – The burgeoning shift to digital and resultant data which is like a ticking time bomb has become a key area of focus in SaaS. According to Gartner predictions, the growth of SaaS adoption by businesses for business intelligence is expected to grow at a CAGR of 23.3%
- Adoption of SaaS stacks – Global businesses are democratizing their technology adoption and deployment across locations using SaaS and iPaas (Integration Platforms As A Service)
- Seamless Automation – The annual spend for marketing automation is expected to reach $25.1Bn in 2023. Time is money and that is what automation is helping save adding to the bottom line and incremental productivity levels among the employees. The other big area where SaaS deployments are creating successful avenues is “Customer Success”.
- Micro-SaaS – It is about addressing niche markets and a loyal customer base. For example – Grammarly for Google Docs
- Vertical SaaS – We touched upon this aspect above. This entails solutions that are tailored for specific industry verticals, such as retail, manufacturing, or tourism. More and more SaaS products will be customized to cater to the needs of specific industries as a trend going further in 2021.
- Customer Success – In today’s digital onslaught it becomes increasingly difficult to rise to the expectations of the customers. They are far more evolved and savvy than the customers were ten to fifteen years ago. The crux boils down to maintaining a CSAT Rating and NPS score well above 9. According to the industry leader Salesforce “, researchhe customers say the experience a company provides is as important as its products and services”. The top-rated SaaS products won’t necessarily be the ones with the best product, but the best combination of product and customer service.
- Additional Offerings – Change is the only constant and this is more relevant in the business world because if you are not constantly on top of what is happening and innovating then you stand to lose the race. Globally businesses are spending 19% of their cloud budgets on services such as consulting, implementation, migration, and managed services. Gartner predicts that this will increase to 28% by the end of 2022.
- Better Security By Vendors – Cyber attacks are not a new phenomenon. Data breaches and privacy safety are big concerns in the digital conundrum. The service providers are under tremendous pressure to keep their infrastructure safe and secure for their customers.
- Incremental SaaS Spending – Between 2019 to 2023, IDC estimates public SaaS spending will soar from $229bn to nearly $500bn, making it the largest category of cloud computing, followed by IaaS (infrastructure as a service) and PaaS (platform as a service).
Wrap Up: –
Cost-Effectiveness, Seamless upgrades, and effective scalability are a few key drivers industry analysts and influencers believe that SaaS is the future for practically all computing. SMB and SMEs are resorting to renting the software instead of investing in hardware and other technology resources. Another aspect that the consumers do not have to worry about is upgrades, security patches, research, and deployment. This implies greater flexibility and scalability.
It’s just a matter of time before retail industries like vending machines and automated stores are completely run through these services transferring the administrative and investment hassle to the service providers or vendors. VendifyTM is one such SaaS vendor which gives you a comprehensive solution to monitor and control the operations of your machines using a server-based software that monitors sales and inventory of each machine, providing insights and statistics to streamline the process. Get in touch with us at email@example.com and we will be in touch with you shortly.