What Are the Current Trends and Future of the SaaS Industry?

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Of the IT market segments, SaaS is among those expanding the quickest.

Software-as-a-Service (SaaS) business models operate on a subscription basis and are located strategically in a remote cloud network. They are becoming popular with businesses for a number of factors, including their cost-effectiveness, flexibility, and ability to lower customer acquisition costs.

The necessity for SaaS will undoubtedly grow as a result of the pandemic’s requirement for increasing remote work. If you haven’t already, it’s important to answer, “What are the current trends and future of the SaaS industry?” before you get started.

Here are the top trends and figures for expansion for SaaS products in 2022. Check them out so that you can strategize the right plan for your business goals.

SaaS Spending vs. Overall IT Spending

saas spending vs overall IT spending

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Despite the pandemic’s negative effects on economies and global trade in recent years, cloud computing growth remained explosive. The end-user cost of public cloud services has been forecasted to hit $482 billion in 2022, which is up by 21.7 percent from $396 billion in 2021.

SaaS vs. Other Cloud Services When It Comes to Cloud Growth

There is little doubt that SaaS has one of the most promising futures among cloud options. In fact, the entire sector is expected to remain stable in the years to come on account of more companies embracing SaaS solutions for a variety of their operations.

Not to mention, this type of software is easier to use because of technologies like artificial intelligence (AI) and natural language processing (NLP), which process voice control and human speech patterns. Altogether, this contributes hugely to cloud platform performance.

SaaS has a huge edge over public cloud services, as it was the first one to truly make its mark in the industry. It is expected to sustain its dominance well into 2022. However, the SaaS growth rate is starting to decelerate, particularly in comparison to services like PaaS and IaaS, both of which are expected to double in the coming years.

Biggest SaaS Companies

biggest saas companies by market cap
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Success in SaaS can also be determined based on the businesses that produce such services. The growth that these businesses have had is astounding in comparison to their figures from 2020. Let’s have a look.

  • Salesforce increased its value by approximately $90 billion from January 2020 to September 2021, skyrocketing to $251 billion from $161 billion in just 21 months.
  • At the start of 2020, Shopify was valued at $52.1 billion; 20 months later, that figure rose by about $133 billion to $185 billion.

Two notable industrial behemoths failing to make this list are Oracle and Microsoft. However, it’s worth noting that a large percentage of their revenue comes from the sale of on-premises software.

Hence, it is inaccurate to refer to them as SaaS providers despite the fact that they are two of the biggest names in the industry.

Software-as-a-Service IPOs and Acquisitions

B2B US saas and software IPOs
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Revenue predictions are but one aspect of SaaS growth. As larger firms look to implement the latest and best SaaS trends, acquisitions start to become more and more frequent.

Businesses, innovators, and entrepreneurs have gained motivation to come up with more sophisticated SaaS solutions. This is because of the investors’ interest in flexible cloud service solutions and the stable economy.

2021 SaaS Acquisitions

The following notable SaaS acquisitions took place in 2021:

Current SaaS Initial Public Offerings

SaaS solutions continue to be relied upon by most companies despite the recent shifts in the employment industry. A number of SaaS companies had a clear path to going public in 2021, thanks to the growth of the business.

As a matter of fact, there was a 125 percent increase in SaaS-specific companies that went public in 2021 versus the same period in 2020. Noteworthy SaaS IPO news of the last year revolved around the following companies:

  • Couchbase
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An expert in NoSQL databases, Couchbase made its market debut in July. The company’s value increased by more than one billion dollars as a result of a price increase of 39 percent, which took its share-per-day to $33.25.

  • SentinelOne

On June 30, the cybersecurity startup SentinelOne had its market debut and closed markets at $42.50 per share, taking the company’s value to $10 billion.

  • Sprinklr

The advertising, social media management, and content marketing tools provided by software developer Sprinklr are most commonly used by some of the biggest brands in the world. When it went public in June at a price of 16 dollars per share, it had a value of $4 billion.

SaaS Workforce Size and Adoption

The adoption of SaaS can also be used to gauge its expansion. Are customers using the same amount or more SaaS products?

Users of SaaS solutions have grown in both quantity and variety significantly during the past few years. Although SaaS was initially marketed as best for SMBs and startups, businesses of all sizes are discovering it to be a digestible, cost-effective option that fosters digital transformation and agility.

Recent studies of SaaS reveal that:

  • Currently, the SaaS market is expanding by 18 percent annually.
  • 99 percent of businesses will be utilizing SaaS solutions by the end of 2021.
  • Nearly 78 percent of small firms have already made an investment in SaaS options.
  • The use of SaaS in the healthcare sector is increasing at a pace of 20 percent annually.
  • Scalability and agility, according to 70 percent of CIOs, are two of the main reasons for employing SaaS services.
  • Small businesses typically focus on a small number of tasks, which necessitates a small number of products. Users working on various projects may have varying needs for SaaS tools as the organization and the number of teams grow.
  • Large enterprises make it simpler to provide as many SaaS resources as necessary to avoid the problems brought on by shadow IT or the use of unauthorized software at work, including cost and security.
  • Since enterprise-level large-scale projects are so complicated, no single SaaS solution can provide all the required features. Users may employ a variety of products created for the same target market and application if they rely on several SaaS solutions to meet their technology needs.

Despite having limited budgets for information technology, clients are increasingly using the subscription-based pricing model, especially for SMBs and startups, to meet their expanding IT needs.

Despite their size, well-established businesses don’t regard SaaS with contempt. Instead, they firmly back the as-a-service enterprise model to meet a variety of needs with flexible, modern solutions.

As a result, the customer demand for cloud vendors continues to grow dramatically, creating an ideal business environment that encourages healthy competition among them.

SaaS companies that began operating around 2012 had, on average, fewer than three competitors. By the end of 2017, there were nine other companies vying for the same SaaS market share, putting pressure on every SaaS business.

Using SaaS marketing solutions between 2007 and 2017 as an example, the number of goods rose from 500 to 8,500. Growth rates for SaaS, IPOs, and acquisitions all suggest that this industry trend will continue for some time.

SaaS from a User’s Standpoint

From the standpoint of the user, SaaS products provide a number of advantages:

  • When compared to on-premise software deployments, SaaS offers greater strategic value. The time required to install software has decreased with the SaaS model from days and weeks to just a few minutes.
  • Users now have a wide range of resources at their disposal, thanks to the abundance of corporate SaaS solutions. As a result, enterprises are seeing increasing employee engagement levels with feature-rich SaaS solutions created for a better customer experience.
  • Unlike on-premise installations, SaaS companies send feature enhancements, security updates, and bug fixes instantly.
  • SaaS technologies have made it simpler for businesses and software vendors to successfully supply the required functionality and features to end customers. This helped SaaS solutions gain favor over on-premise software solutions.
current trends and future of the SaaS industry

What are the current trends and future of the SaaS industry? Software-as-a-Service (SaaS) solutions are still on the increase in general. SaaS is used by both large and small enterprises to improve control over cloud platforms and customer service. And this number will only rise as other alternatives join the mix.

1. What does the future look like for SaaS products?

In the future, businesses will incorporate machine learning and artificial intelligence into their digital services. The market winners will be determined by this, in combination with an open application programming interface (API) and cloud agility. SaaS will fundamentally alter how we conduct business in the future.

2. Is SaaS obsolete?

The market for Software-as-a-Service (SaaS) products has soared as the cloud expands and matures, rendering conventional on-premise software outdated. SaaS actually accounts for more than five percent of new software installations.

3. Is the SaaS industry good?

There are plenty of work opportunities in technology, particularly in the computer and software sales sectors. That job market is anticipated to grow by 25 percent between 2019 and 2029. Since new software and technological developments are continually released, there will undoubtedly be an increase in demand for SaaS sales specialists.

4. Is selling SaaS hard?

Though challenging, selling SaaS is not impossible. You will significantly improve your chances of success if you implement the proper tactics and resources into your sales cycle. Thus, spread the word about this post to your network, ensure that everyone on your team understands how to sell SaaS, and then make calls and begin selling.

5. What makes a SaaS salesperson good?

The best SaaS representatives are excellent communicators, both orally and in writing. More importantly, they are well versed in the difficulties of inside sales. Great sales representatives can establish a solid connection with a potential customer after just a few phone conversations, which is harder than it sounds.

Uday Tank is a serial entrepreneur and content marketing leader. He has a wide variety of interests and enjoys writing, including marketing, productivity, business, health, diversity, and management.