The SaaS industry has experienced huge growth over the course of the last few years. Thanks to a number of factors, including faster connections, larger bandwidths, improvements in data processing and global digitalization tendencies, it doesn’t seem like it'll stop any time soon.
This market is expected to grow to $60 billion from 2019 to 2023, which amounts to a 9% annual growth rate.
More and more businesses choose to buy this kind of services, as they’re becoming increasingly convenient and cost-effective. According to some projections, 86% of companies will be running purely on SaaS as soon as 2023, compared to an already whopping 58% in 2019. However, a growing market means growing competition as well, which in turn means that SaaS companies have to work hard to come up with innovative solutions to improve their services and edge out their rivals.
A lot of new tendencies in the industry will be focused on further customization of software as well as flawless user and customer experience. Other trends are related to the issues of security and new technologies employed in the SaaS world. Let’s see all these in more detail.
Vertical SaaS
As it was said, one of the most important objectives of the SaaS industry has become creating a better, more customized system tailor-made to meet very specific needs. That’s why vertical SaaS, the one that is focused on a particular niche has been on the rise. As a matter of fact, vertical SaaS market has tripled in the last ten years.
This is no surprise, as a SaaS solution that is made specifically for a certain industry leads to a number of improvements for businesses that decide to use it. These include better data governance, increased business value and greater accuracy of analytical tools.
Turning to vertical SaaS can bring benefits to software providers as well. Focusing on just a chunk of the SaaS market means they need much fewer resources to get to know their potential customers and reach them, compared to those who use a horizontal approach. Also, there are still niches that are not sufficiently covered by cloud-based software companies and these are basically up for grabs. They will be heavily targeted by SaaS businesses in the forthcoming period.
Pricing policy
In 2020, we’re about to see a bit of a change in pricing arrangements. So far it has been quite common that customers pay subscriptions at a monthly or annual level, but now the transaction model is becoming more and more popular.
This means that SaaS users are increasingly choosing to pay only for what they used, after they had used it. The pay-per-use model offers customers even more flexibility and a chance to further cut their expenses. This could be especially handy for businesses that provide services with a limited time-frame or those with an unsteady workload and cash flow.
Security
One of the hottest topics in the IT industry as a whole is data and user security. It’s the one issue that can cause catastrophic consequences for companies that handle it badly, regardless of their size or previous reputation.
Naturally, all this goes for SaaS companies as well. In fact, 66% of IT experts say that security is their biggest concern when it comes to adopting an enterprise cloud computing strategy. We’ve already seen some large-scale attacks in the past, with the most massive breach happening back in 2012 when 68 million email addresses were stolen from Dropbox.
Since then, the cybersecurity industry has improved substantially, but so have cyber-criminals. If businesses don’t want to get caught in the middle of this never-ending war, they’d better be very careful with respecting security protocols, hiring the right staff and choosing a reliable SaaS solution.
Artificial intelligence
In recent years, we have learned that the applications of artificial intelligence in emerging technologies are practically unlimited. SaaS industry is no exception, with AI and machine learning being used to improve numerous aspects of the newest generation of software.
AI can be particularly useful when it comes to security in cloud computing. Algorithms generated by AI are particularly successful in recognizing different kinds of threats and reacting quickly to them. Other uses include data analysis, speeding up internal processes, automating a great deal of different tasks and much more.
AI has the power of learning and adapting to new input on its own, which is exactly what makes it so exciting. Given this fact, we can’t even predict what kind of effect it’ll have on the SaaS industry in the years to come, but it’s definitely a technology that’s here to stay.
Mobile-first approach
As we’ve already seen, a lot of trends we expect in the SaaS world in 2020 are heavily influenced by other trends and developments in related industries. It was 3 years ago when worldwide mobile traffic has surpassed desktop traffic, and since then, the gap between the two is only getting bigger.
Obviously, this is due to mobile devices getting more advanced and powerful, as well as the growing need for constant mobility and accessibility in business today. This means that SaaS companies will have to make their mobile apps quick, responsive, and user-friendly if they want to survive.
Integrations
Most companies use different software for different aspects of their business. Now, if not connected properly, these pieces of software are basically going to exist in separate IT environments. This makes accessing, processing and integrating the obtained data much harder. In addition, managing several different systems from several different dashboards can be time-consuming and increases the danger of human error.
That’s why most companies choose to integrate different apps in order to get much easier access and control over their business activities. So when they decide to introduce new software to cover a certain area of their business, they definitely prefer to connect it to their existing infrastructure, especially if it’s not entirely cloud-based.
For this purpose, SaaS vendors can employ third-party APIs, but it’s becoming more and more common to equip the software with integration capabilities that make things much easier for the client. This trend has been around for a few years already and it will get even stronger in 2020.
Micro-SaaS
As it was said at the very beginning, the demand for SaaS systems has risen dramatically in recent years. However, biggest markets are often already covered by biggest vendors and it’s very difficult for small, up-and-coming SaaS companies to deal with this kind of competition.
Hence the micro-SaaS trend is picking up speed. Micro-SaaS solutions are usually extensions, add-ons or plugins for other already existing platforms.
For a relatively small and insufficiently funded SaaS provider, creating a whole new platform that would compete with some of the industry leaders is impossible. But creating a simple extension doesn’t demand too much time or resources and a lot of small teams and solopreneurs in this sector choose to take this road. That’s why we’ll see an increase in the number of micro-SaaS vendors in the years to come.
Final thoughts
There are a number of other trends expected to dominate 2020 when it comes to SaaS, such as white labeling, unbundling, migration to PaaS and more. In any event, all the mentioned trends will likely lead to a smoother, more secure and highly personalized experience for all SaaS users. There’s an exciting year in front of us and it’ll be interesting to see which way the SaaS industry will develop in the years to come.
