What is SaaS? 10 SaaS Examples & Trends to Watch in 2020
Every business faces the same challenge: to generate a consistent profit while continually growing and improving customer satisfaction. The way businesses reach this goal has changed a lot in recent years, especially with software at the core of business success.
Like their customers, businesses aren’t looking for a solution that works; instead, they’re looking for the best experience possible. They’re expecting a software solution that boosts productivity, lowers costs, and improves the bottom line. And that’s where software-as-a-service (SaaS) comes in.
Even with SaaS’s growth, some companies and business leaders are left wondering what SaaS could help their operations. What is exactly SaaS? What are the benefits and risks of SaaS? And which are the latest SaaS trends to watch in 2020, especially in the middle of Covid-19?
These are the questions we’ll address in this comprehensive guide to SaaS.
Let’s dive right into it right now!
Table of content
- What is SaaS?
- Types of SaaS applications
- Benefits and risks of SaaS
- SaaS vs. PaaS vs. IaaS
- 5 examples of SaaS companies
- 5 SaaS trends to watch in 2020
- The bottom line
What is SaaS?
We should start with the basics: What is software-as-as-service (SaaS), anyway?
SaaS is defined as a software distribution model where an external provider hosts applications and makes them available to customers through the Internet. SaaS is one of the significant categories of cloud computing, together with infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS).
SaaS customers typically pay a subscription fee - often monthly - to access the application. Some subscriptions are based on how much data needs storing, the level of technical support desired, or the number of users who will access the application.
The idea of SaaS began to spread by entrepreneurs in the 90s. And up to now, at least 51% of companies already operate every process in the cloud. By 2020, this figure is to increase to 73%. Besides, the SaaS industry’s revenue is anticipated to reach approximately $133 billion by 2020.
Types of SaaS applications
SaaS solutions literally cover all business processes for companies of all shapes and sizes. Some mainly focus on enterprise-level solutions for project management, others concentrate on specific industries, and still, others offer a specialized tool for medium and small businesses alike.
There has actually never been so much choice for business software. Businesses can now explore specific SaaS products for nearly any area of business practice. Some of the most common types of SaaS applications available include:
- Customer Relationship Management (CRM). These applications allow companies to manage customer information, track sales through their pipeline, and automate marketing functions.
- Web hosting and E-commerce. Remote servers can deal with everything a business needs in its online presence.
- Communication platforms. Sending instant messages and sharing files to enhance collaboration for teams based out of multiple locations.
- Accounting and invoicing. Some SaaS companies emphasize on billing and invoicing services. Others provide a full range of financial tracking and reporting services.
- Payment gateways. These applications based on the SaaS model include accepting credit cards, processing bank transfers, providing offers and rewards programs, publishing and tracking coupons.
- Human resources. SaaS products enable organizations to track employee working hours, automate payroll processes, schedule interviews, and streamline the hiring process.
- Project management. SaaS products offer end-to-end project management solutions, such as composing plans to listing requirements and tracking progress with respect to deadlines and deliverables.
- Enterprise resource planning (ERP). This system helps manage every business process in real-time and is most suited for big organizations.
- Data management. SaaS products help analyze and secure a company’s data.
- Email marketing software. This helps a company maintain communications with customers, build loyalty, increase brand recognition, and drive sales.
Benefits and risks of SaaS
Many people believe that SaaS offers many potential benefits over traditional business software installation models. But is everything truly so smooth? Let’s find out the pros and cons of SaaS!
It is undeniable that SaaS customers can realize the following benefits:
- Lower initial costs. SaaS is typically subscription-based and has no initial license fees, which eventually results in lower upfront costs. SaaS providers manage the IT infrastructure running the software, which reduces the expenses for hardware and software maintenance.
- Accessibility. All you need to access SaaS is a browser and an Internet connection. The availability of a wide range of devices and from anywhere in the world makes SaaS more accessible than traditional enterprise software installations.
- Scalability. SaaS providers typically provide many subscription options and flexibility to change plans if necessary, for instance, when your business expands or when more users (employees) need access to the service.
- Simple updates. SaaS providers take care of software and hardware updates, deploy updates on hosted applications, and eliminate this workload and responsibility of customers.
- Flexible payment options. Instead of paying all at once, customers can subscribe to SaaS products for a monthly/ yearly or any offered frequent basis.
However, SaaS can entail some risks as follows:
- Control issues. Leaving software maintenance and upgrades to a service provider lessens your burden, but it also makes you lose control over the software and apps you’re using. You can’t customize these applications based on your needs and end up being dependent on the version of software your service provider offers.
- Connectivity issues. Even though storing everything on the cloud can save your time, you may find it challenging if there is an outage issue. Or, in case your Internet connection is not stable enough, your work will be interrupted. This issue can affect the overall performance and decrease the productivity of your employees.
- Security issues. There are a few doubts that some SaaS companies don’t comply with security standards and aren’t transparent about security. Also consider that allowing users remote access with any device can increase possibility and vulnerability to unauthorized use.
- Government regulations. Many SaaS solutions deal with data that is under state regulations. Hence, there may be a tech challenge to meet state requirements, whether it is compliance with GDPR or HIPAA.
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SaaS vs. PaaS vs. IaaS
As stated above, the three major cloud service models include SaaS, PaaS, and IaaS. Many business owners don’t know the differences between these three offerings and are therefore unaware of which option is best for their company.
So, in this section, we’ll break down the differences among the three models and based on that, you can make an informed decision.
But first, we need to define what they are. So, let’s have a quick look at what it really means to use software, platform, or infrastructure as service.
Software-as-a-service (SaaS), as mentioned earlier, is a software distribution model in which a service provider hosts an app and makes it available to subscribers over the Internet. Customers can access the software from any device and anytime to stay updated with the latest version, as long as there is an Internet connection.
Platform-as-a-service (PaaS) provides developers with a complete environment for deployment and development over the Internet. With PaaS, developers can generate everything from simple apps to sophisticated closed-based software.
Infrastructure-as-a-service (IaaS) is fully self-service for accessing and monitoring computers, storage, networking, and other services. IaaS enables businesses to purchase resources on-demand and as-needed instead of having to buy the hardware outright.
These three cloud service models mostly differ in what they provide out of the box for the end-users of the service. Let’s look closer at how they differ:
- Data and software. SaaS users don’t have to worry about managing data usage or application upkeep. Meanwhile, PaaS and IaaS solutions both require customers to manage their own data usage and applications.
- Operating systems. When it comes to controlling the operating system that the software runs on, SaaS and PaaS providers handle this for users. But IaaS customers are still left to handle this aspect of their technology stack by themselves.
- Servers and data storage. Because all three cloud computing models are delivered via the Internet, they all handle the management of servers and data storage for users.
So, the below table shows what each business manages when using each service. If unchecked, it means that a service provider manages.
5 examples of SaaS companies
Have you ever asked yourself what makes a SaaS company stand out from the crowd?
To answer that question, you should read the following list of 5 common SaaS examples, which will inspire you to take a leap ahead and push your company in the right direction.
The first name undoubtedly belongs to Google, who owns up to 137 Internet-oriented products, including Survey, Document Creation, Cloud Content Collaboration, Digital Analytics, Video Conferencing, and many more. The most popular products are known as Google Docs, Google Drive, Google Forms, Google Analytics, and Google Hangouts Meet. The company began as a little startup in 1998, and after over 20 years, it has $136 billion in revenue.
Perhaps most of us know what Illustrator, Photoshop, or Illustrator are. Adobe owns more than 50 products in digital marketing, photo and video editing, printing, and publishing software. With their help, users open 200 million PDFs every year. In turn, the Adobe users help the company earn $11.17 billion in 2019.
Founded in 2001, MailChimp has become a leading marketing platform for businesses, which provides solutions in email marketing, transactional email, and marketing automation. Its main product, MailChimp, is an email marketing platform that allows users to schedule automated emails and track their results. In addition, we also evaluate MailChimp as one of the most inspirational B2B websites all over the world.
Started as a massive multiplayer game that failed, the company managed to morph into Slack, we all know and use today. Slack currently develops three products, and its main product is Slack messenger, which is a collaboration and chat tool that allows for internal messaging, video conferencing, and AI bots.
As known as a fantastic application and platform provider, Shopify is widely used among E-commerce stores and retail Point of Sale (POS). With three main products, including Shopify, Shopify Plus, and Burst by Shopify, the company has powered more than 800 thousand entrepreneurs worldwide.
You should read our full list of top 10 B2B SaaS companies to get more inspirations for your next projects.
5 SaaS trends to watch in 2020
It’s obvious that the SaaS industry has been undergoing an exponential amount of expansion over the past few years. A wide 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.
But keep in mind that in 2020, the emergence of the Covid-19 pandemic has changed a lot the way we do business. Amid forced digitalization and remote work culture, SaaS companies have been experiencing a great shift. So, how do they respond to the crisis, and what are the new SaaS trends right now?
Keep reading our article and explore it!
Trend #1. Telehealth is on the rise
According to experts, telehealth apps will likely remain a trend even after the pandemic outbreak. The reason behind it is so simple. SaaS medical apps simplify the shift to remote healthcare we have been long heading to. They eliminate the risk of spreading infections during physical clinic visits, reduce operating costs, and handle huge loads of requests. Scheduling an initial medical consultation becomes much faster and easier than a traditional method.
One typical example of this trend is a telemedicine app Livi Connect. The application has become the most downloaded in Europe, with 80% consultations growth compared to the same period last year. To create a competitive edge, the company has created a new product to check for the Covid-19 symptoms. Meeting the global need for remote health assistance, the company expects to see some positive dynamics for months to come.
But does this mean that telehealth SaaS startups will come out “winners” after the pandemic? Although there are no winners, they might be in a more favorable position than some other businesses.
Trend #2. Virtually all aspects of the enterprise increasingly require technical know-how
According to a survey from late last year by Globant - a digitally-native technology services company, while most companies were working toward powering digital strategies, fewer than 10% of employees were actually involved in digital transformation efforts.
Many enterprises have been forced to apply digital initiatives with the move to “all remote,” and some will be questioning whether digital transformation will be a new ongoing priority or just a temporary one.
One method to achieve ongoing digital transformation company-wide is “dev diaspora,” a particular term used by Forrester in its 2020 software development predictions. Forrester believes that developers will keep moving outside the IT side of the house and into the line of business operations. Software is truly “too important to be left just up to the IT org.”
Trend #3. Remote tools to collaborate and manage work are booming
A full transition to remote work is another significant change. Companies that haven’t been prepared for this transition now see the importance of remote communication and project management tools in their business.
For example, Klaxoon, a French virtual meeting tool, has seen a 90% increase in traffic since the pandemic outbreak. The company offered a 3-month free trial period coupled with free guidance to simplify the team onboarding. By doing this, Klaxoon could attract more users and expand its reach.
However, some SaaS providers haven’t been well prepared for such a drastic change. Take Zoom as an example. This video conferencing tool received 200 million unique daily visitors in March 2020, which led to some serious privacy issues. Hackers could even steal users’ passwords and enter chat rooms due to some newly found bugs.
When remote collaboration becomes the new norm, lots of things have to be considered. For this, secure and feature-rich SaaS solutions play an integral role. Once companies set up their remote work and secure VPN access, they will look for affordable and reliable software to ensure their operations.
Trend #4. Low and no-code platforms are “red hot”
A low-code platform is a platform that can be fully customized with a low or minimal amount of programming. Instead of spending weeks or months to develop a custom application, users can complete tasks in a few hours or days. On the other hand, no-code software allows literally anyone to tailor an application to their needs without any programming knowledge.
Low and no-code tooling is catching on with developers in a significant way, according to Forrester. Half of the developers they surveyed responded that they have adopted or are planning to adopt low-code tools.
Low or no-code tools are increasingly becoming available to non-technical staff with the ultimate goal of bringing businesses and products closer together and enabling faster communication.
Trend #5. The usage is growing, but a cash decline
As SaaS is easy to adopt and maintain, many businesses choose it over on-premise products. However, it doesn’t always mean a revenue rise due to the Covid-19. Since the whole industries become frozen, tech investments also reduce, and SaaS products have to adjust fast.
Adobe, Dropbox, and Salesforce are extending free trial periods and upgrading their discounts. Cisco web conferencing tool has removed time limitations and expanded its participants’ capability to 100 in a single call.
Businesses try to help their clients with their services and support them during the Covid-19 crisis. After all, we’re all in it together and supporting each other is the smallest thing we can do.
The bottom line
Many experts believe that cloud infrastructure services and specialized software demonstrate the only positive growth in global IT spending. Hence, the SaaS industry is likely to evolve further.
We hope that through this comprehensive guide, you can broaden your knowledge of SaaS and adapt yourself to the current situation. Feel free to write down your opinions, questions, and feedback in the comment box below.