Strategy & Best Practices

Three Reasons Why SaaS Platforms Are a Must-Have Technology Today

By Ideas @ AppDirect / November 2, 2020

Salesforce may not have invented software as a service (SaaS), but it certainly cemented the term in the public’s mind. Indeed, prior to Salesforce’s 2000 “The End of Software” campaign, the idea of selling, distributing, and managing software online as a subscription-based service remained sketchy for businesses accustomed to acquiring software via floppy disc or CD and paying for it through expensive licensing models.

But by disassociating software from a physical product, Salesforce was able to get out the message that users no longer needed to touch their software. You just signed up and used it—it was as simple as that. And with the corresponding rise of clouds such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure, it was as simple that.

Add to this the numerous advantages of the then-new cloud-based distribution model—including lower costs, increased scalability and flexibility, easier implementation and maintenance, and faster innovation—and it’s easy to see why SaaS has become both a billion-dollar industry and an avenue to digital transformation.

State of SaaS Today

For Salesforce, the decision to offer its customer relationship management (CRM) solution as a SaaS platform—and to launch a marketplace (AppExchange) for business applications purpose-built for that platform—was a sound one: In 2020, the company had revenues in excess of $17 billion. As for AppExchange, by 2024, the Salesforce ecosystem is expected to be six times bigger than the company itself.

This is heady stuff, and Salesforce is not alone. Today, the stories of SaaS platform success are legion, and the industry is booming. By the end of 2020, the SaaS market is expected to reach $157 billion (up from $10 billion in 2010). What’s more, recent research shows that 73 percent of organizations will be using all or mostly SaaS solutions by 2021, and more than 85 percent of small companies have already invested in SaaS solutions. With organizations of 250 or more typically using more than 100 SaaS apps, and small firms (with up to 50 employees) using between 25 and 50 solutions, the writing is on the wall: If your organization has not already launched a SaaS platform, the time is right to do so.

Three Reasons You Need to Launch a SaaS Platform Now

Before we tell you why a SaaS platform is a must-have technology at this moment in time, let’s take a step back and look at just what exactly a SaaS platform entails.

As a digital platform used to sell, distribute, and manage cloud-based software and services, a SaaS platform can offer a wide range of features and functionalities. It can include business-to-business (B2B) software (such as Microsoft 365 and Google Workspace), solution add-ons (like the products developed for Salesforce.com and sold in its AppExchange), consumer apps (such as games for iOS and Android devices), and more.

At its most basic level, however, a SaaS platform should make it easy to streamline application onboarding, automate backend processes such as billing, and instantly provision cloud-based solutions.

While the benefits of SaaS platforms are myriad, here are three compelling reasons to launch one now:

1) Remote work is here to stay

While 2020’s global pandemic will end one day, many of the societal changes it has caused will not. Chief among these is the rise of remote work. As companies have scrambled to accommodate a newly remote workforce, they have discovered not only that it can be done, but that they can cut costs (by reducing office space), help save the environment (by reducing their carbon footprint), and empower employees (by giving them the flexibility they’ve long desired) in the process.

SaaS platforms are key to this effort because the cloud-based systems on which they’re based make it possible for employees to access the tools they need to do their jobs from wherever they are, as long as they have an Internet connection. Likewise, a SaaS platform gives businesses the ability to scale at will without the need for on-site and in-person maintenance.

With 88 percent of a company’s workforce being encouraged to work from home currently and 59 percent of U.S. workers saying that they would prefer to do so even after COVID-19 has been tamed, the remote-work imperative cannot be ignored.

2) Micro-SaaS and vertical SaaS are on the rise 

In the early days, SaaS platforms tended to be broad—providing core services such as productivity tools (think Microsoft 365), CRM software (think Salesforce CRM), and accounting applications (think Quickbooks Online) across a wide swath of industries. Large companies dominated, and market entry could be daunting for smaller companies with limited resources.

Not so today. With vertical SaaS on the rise (indeed, that market has more than tripled in the last decade), industries like health care and remote learning are increasingly gravitating to SaaS platforms designed specifically for them. And smaller SaaS providers are realizing there’s money to be made by not taking on the big guys but rather delivering tools (such as extensions, add-ons, and plug-ins), which extend the capabilities of existing SaaS solutions.

The SaaS platforms of today are the richer for this—offering greater integration and more feature-rich solutions. And the lesson for independent software vendors is clear: Your offering doesn’t have to be big or broad to benefit from or add strength to a SaaS platform.

3) Artificial intelligence has entered the picture

Artificial intelligence, or AI, is no longer a nascent technology. AI has arrived, and it’s infiltrated SaaS platforms in a big way, bringing with it huge improvements in speed, security, automation, personalization, data analysis, and more.

Helping to ease fears about cloud security and to further optimize business processes, AI systems are reinforcing SaaS platforms and increasing user productivity by eliminating redundant tasks and improving customer interactions with SaaS tools.

When you take all of this as a whole, it’s clear that the time for a SaaS platform is now. 

If you’re interested in learning more about how COVID-19 has impacted digital commerce initiatives, download our new survey report,“The State of B2B Subscription Commerce in the New Normal.”

READ NOW

Ideas @ AppDirect is a leading source for trends, statistics, best practices, and other information related to the digital economy.