SaaS (Software as a Service) it is a software distribution model where a third –party hosts applications and make it available for customers over the Internet.
It has three main categories.
a. Cloud Computing
b. Infrastructure as a Service (IaaS)
c. Platform as a Service (PaaS)
Many users have hands-on experience with cloud- based apps like Office 365, Salesforce, Google Apps, but very less have developed apps using PaaS (Platform-as-a-Service) or spun up a datacentre’s worth of VMs using IaaS (infrastructure-as-a-Service).
No surprise, then, that in its 2015 Cloud Computing Hype Cycle, Gartner placed SaaS well on the way toward the ‘Plateau of Productivity’ (the final stage, where mainstream adoption has been achieved), with ‘Sales Force Automation SaaS’ having already got there.
Key Aspects of SaaS Market
a. Horizontal V/s Vertical SaaS- Traditionally business functions were addressed such as Finance, Accounting, Analytics and Business intelligence, CRM, ERP. These are some Horizontal SaaS Applications.
A single size of enterprise software doesn’t necessarily fit for all potential customers. For example, the healthcare industry may not have much use for cloud services. But when it comes to functionality, you can definitely hire a SaaS specialist for SaaS who is also a domain expert in your chosen field.
This is the Reason Vertical SaaS applications are increasing for particular key markets. Venture capital firm Emergence Capital Partners (ECP) specialises in funding vertical SaaS companies and has mapped a burgeoning industry cloud landscape comprising over 400 firms in a wide range of vertical markets, headed by healthcare and energy/utilities.
b. From SaaS to PaaS- Once Software as Service reaches a certain level, the focus tends to move to customer retention from customer acquisition. Apart from this, we can also follow is to add Platform-as-a- Service (PaaS) which helps customers to create and distribute add-on apps for the flagship product.
c. Mobility and UX –Nowadays, we can find mobility is also important. It’s not that all applications are only moving to the cloud. We can find some SaaS applications are inherently ‘mobile –first’. ECP found that more than 300 companies are focusing on productivity (content, task management, mobile forms and events.)
d. Small businesses and SaaS- When it comes to managing on-premises infrastructure and applications. SaaS Applications are suited for start-ups and small businesses.
Research published last year by BCSG says that nearly two-thirds (64 percent) of the survey population were already using cloud-based software, averaging three applications per company (mostly in well-established areas like email, website creation, and payment acceptance).
By 2017, however, 78 percent are expected to have purchased new solutions, moving the average app count to seven.
BCSG’s survey identified collaboration, financial management, customer management, marketing, and project management as key areas where SMBs were seeking support from SaaS vendors.
e. SaaS Company Performance-The question always arises as to how these SaaS companies are performing as a business? From 2016 SaaS Metrics Survey found that two-thirds of surveyed SaaS companies experienced annual churn rates of five percent or higher; for the large majority of SaaS around 20% or less than that were of new revenue came from existing customers in the form of upselling and expansion sales.
f. APIs and Micro-SaaS Businesses-This new SaaS start-up doesn’t deliver a fully-featured application, but it gives an API toolset usable by non-techies as well as developers which help the customer to tailor their services as per their requirements. There is another trend, i.e. Micro-SaaS business which helps teams to produce niche product for specific needs or add-on products that complement existing SaaS applications.
SaaS Software as a Service offers inevitable benefits for business from a mobile accessibility or either to cost savings.