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7 Trends That Will Shape The SaaS Industry and Market in 2020

The SaaS industry has been undergoing a considerable amount of expansion over the past few years. A variety of trends have driven much of this. While some of these have come and gone without making too large of an impact, some have continued to make their presence felt.

To properly take advantage of these trends, SaaS business owners may need to use them as early as possible. There are a few notable trends that have begun making an impact on the industry, with some of them looking to keep doing so.

While how much of an impression these will make in the SaaS market will vary, each will undeniably have a noticeable one.

Upcoming Trends Affecting The SaaS Industry & Market

Vertical Specific Applications

For much of the industry’s history, SaaS companies have focused on providing core functions and services to their clients, such as accounting, sales, and much more. While this approach has been successful for quite some time, it looks as though this may need to change.

The majority of this is driven by the fact that the approach may be too broad for quite a significant number of potential clients, who may want a more specific software. Much of this can be seen in the fact that many firms will want a vertical-driven solution focused on their industry.

This is an area that’s becoming increasingly well-known as industry cloud. While this has been a SaaS solution for several years, it’s becoming increasingly more popular.

Leaning Towards PaaS

Customer retention is something that every business will need to focus on, although this is something that SaaS mightn’t excel in. As a result, an increasing number of companies have been leaning towards platform as a service (PaaS) to improve and maintain their retention rates.

PaaS focuses on allowing clients to create or purchase add-ons to the product that they initially bought. Doing so allows SaaS/PaaS providers to offer clients a much more personalized approach to their client’s needs, which should encourage their growth rate and customer retention.

Clients will want to take advantage of this for a variety of reasons, especially given that they’ll be getting much more value for their money.

Mobile-First SaaS

For the past few years, SaaS has been focused on a computer-first approach, which has often meant that mobile devices have been left behind. There have been a variety of reasons behind this, with some of the more notable focusing on technological limitations.

However, this has been changing significantly recently, as mobile devices have become increasingly sophisticated. As a result of this, more SaaS firms and their clients have looked toward taking advantage of these devices.

Unbundling

Traditionally, SaaS services have been delivered as a bundle, with customers picking and choosing what they use after they’ve paid for it. For many customers, this has been seen as a waste, especially when it comes to value.

As a result of this, an increasing number of SaaS firms have begun unbundling their services and breaking them down into their core functions. By doing so, they’re able to offer clients these core services and a variety of optional extras.

This is something that could be beneficial to both SaaS firms and their clients, as it leads to more value and fewer resources needed for both companies.

Rise Of The Micro-SaaS

Since the SaaS industry has become increasingly competitive, the majority of companies have found it challenging to stand out. However, this hasn’t meant that they haven’t been able to find their niche. Instead of looking to expand their market share, many have instead sought to become micro-SaaS companies.

These businesses are quite different from their larger counterparts in that they typically offer various add-ons to SaaS services instead of the full product. As a result, they’ve been able to carve out a small, but notable, market share.

Incorporation Of Artificial Intelligence

Few people knew what to make of Artificial Intelligence (AI) during its infancy, although it’s being used in an increasing number of industries over the past few years. This has extended to SaaS, which has started to use it in quite a significant number of applications and development methods.

Much of this can be seen in helping automate a variety of core functions while allowing firms to take advantage of various benefits and features. Machine learning is also incorporated into this, with the technology enabling companies to monitor and improve on SaaS solutions.

Personalization

The majority of SaaS customers are looking for increased personalization in what they’re provided, which has become increasingly more common in the past few years. There are several ways that this can be done, with AI playing a large role in this, among others.

The majority of this personalization focuses on SaaS companies creating their solutions based on a client’s needs rather than taking a more one-size-fits-all approach. The level of customization that a company can offer can increase over time as they receive more and more data focused on how their clients use the platform.

Enhanced Security

Over the past several years, online security has come into focus in quite a large number of industries. This has primarily because there have been quite a variety of prominent hacks performed in recent years, which has meant that technology companies have had to place a considerable amount of emphasis on the area.

Artificial Intelligence has been playing quite a large role in improving security, although there have been a variety of other factors in it. Much of this is being done to automatically detect and eliminate any security threats that companies may come across. This should be seen for both SaaS providers and their clients.

Use Of Blockchain

While the use of blockchain isn’t too common yet, it looks to pick up a considerable amount of steam in the coming years. Much of this has been because blockchain technology has been disrupting quite a significant number of industries for the past few years.

The primary driver for this is that the tech can make online transactions easier and more transparent. Though much of this has been seen in the cryptocurrency industry, the technology has slowly been making an impact on quite a large number of niches in recent years.

Though this has only started in the SaaS industry, it’s something that could pick up a significant amount of speed.

Transaction-Based Models

SaaS companies have typically used subscription pricing models for generating their revenue, although this looks as though it’s changing. The primary reason that this has been a common pricing strategy has been because it uses a set fee every month or year, which can be beneficial.

However, firms are now taking advantage of transaction-based pricing models, where clients pay per use. There are a few reasons for this, with one of the more notable being that it can often be one of the more cost-effective choices for clients, as they’ll only have to pay for what they use.

10 Key SaaS Statistics You Need To Know

The variety of changes being seen in the SaaS as a service industry can be seen in quite a large variety of statistics. While growth within the niche is something that many people will expect, where and by how much it does so can be surprising. Some of the more notable trends include:

  1. The global SaaS industry is expected to be worth $60.36 billion by 2023, an increase of 9% in the next four years.
  2. The corporate mobile market within SaaS is expected to be worth $7.4 billion by 2021.
  3. 38% of SaaS companies charge based on usage.
  4. Half of all SaaS companies depend on user-based pricing for profit.
  5. Less than a third, 31%, of SaaS businesses charge a small discount.
  6. Only 40% of SaaS firms reported taking a value-based approach to pricing.
  7. A 1% rise in price should net firms an estimated 11% increase in profits.
  8. 93% of CIOs in the SaaS industry reported that they’re planning to adopt cloud SaaS.
  9. Over a third, 37%, of SaaS companies said that flexibility is a notable component in adopting cloud-based systems.
  10. Microsoft is the largest provider of SaaS services and has an 18% market share.

The SaaS industry will continue to evolve over the coming years, with this change showing no signs of slowing down anytime soon. By knowing what lays ahead and how to overcome or capitalize on these trends, the majority of business owners should be able to go from strength to strength.