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Why the SaaS Model is the Future

SaaS Giants, SaaS Leaders, SaaS Unicorns. 

If you are a part of the IT industry, you would have by now, heard the term SaaS. 

Software as a Service (SaaS) is software hosted in the cloud, available for users across the globe. Someone in Nigeria can be using the software that was built in India. How exciting is that?

It simplifies life for many organizations and their employees. The capability of accessing software anytime, anywhere, increases the organization’s productivity and helps them focus on their business. 

SaaS is an evolution of the idea behind time-sharing system of the 70’s. According to 99 firms, by the end of 2020, 41% of the workloads will be on the public cloud, 20% on the private cloud, and 22% on the hybrid cloud. Only 27% of all workloads will be on-premise. 

The total market size rose to $141 billion figure in 2019. By the end of 2020, the SaaS market is expected to grow to $157 billion. This is almost the double of what it was in 2014.

SaaS solutions scale so much faster because they make work so much easier for its users. Here is an example:

Let us say, you are into the education business. You have a learning app to teach kids between 7 to 17. Now, to run this business successfully you need to do a lot of things.  You should set up a website, integrate a payment gateway, purchase a server to store the payment information, etc. All of this is apart from ensuring if what you teach is on par with the expectations of the user and if it adds value to the kid. Now, creating and maintaining a website might not be your area of expertise. Even if you were to hire a developer to do this, there are a lot of laws and regulations, such as PCI, SCA that you must take care of. This becomes tedious, time-consuming, and it may be well out of your business scope. Instead of doing all this, you can find a software that runs on the cloud to do the job for you, leaving you free to focus more on what you do best – teaching kids!

Because of this, SaaS tools are revolutionizing the way companies work. SaaS delivery models are being used in almost all industries – banking , telecom, automobile etc. Most organizations prefer the SaaS model as it is easy to access and eliminates the high hardware, licensing fees, and maintenance associated with an on-premise model. 

Life before SaaS

The advent of SaaS is a real boon to the companies. It makes things scale faster. The installation is quick and most often does not require developer’s assistance. 

Life before SaaS involved companies investing a huge amount of money in hardware and licensing. They either built products on their own or bought on-premise software that had to be installed in the system. 

But there was another set of businesses that relied on the ASP platform. The ASP platform was similar to the SaaS. The users had to pay for a service that was accessed using a Website. Some companies like Salesforce evolved into SaaS while most of them failed. 

So, If ASP was a lot similar to SaaS, why was it a failure? 

ASP needed physical servers and required manual help to meet the users demand. Let us say, you are using an email hosting service. For every email request, the ASP would have to manually set up the server, which is not the case for SaaS.

Advantages of using SaaS

  • SaaS models are a huge boon when it comes to saving time. You get to use the product instantly. All that you will have to do is signup for the product. Ideally, building the same product would have taken days or even months to build depending on your resource.
  • It is easy to understand and use. All the companies provide online help or support that handhold you into learning the product.
  • There is no upfront hardware or license costs when it comes to SaaS. Most of the SaaS companies offer a pay as you go pricing model. This gives you the luxury to cancel your subscription at any time. 
  • SaaS tools offer easy integration with other resources, this makes data migration easy for you. For instance, assume that you have a CRM tool that collects the details of all your leads. You also have a help desk tool to monitor support tickets. Let’s say you want your sales representative to be notified every time their lead rises a support ticket. This would end up being a tedious task if done manually. But, when using a SaaS product all that you will have to do is integrate the CRM and help desk solution.
  • SaaS companies have a large customer base. This means they constantly develop new features to satisfy the requirements of their customers. You as a user of their product also get to access these features. 
  • Since SaaS is hosted on the internet, you can access it anytime on the go. 
  •  It makes budgeting simpler 

SaaS during Recession

The COVID 19 novel virus has brought the world to a halt. But, the SaaS firms are going through this unscathed. Most of the sectors are facing huge financial issues and there is a huge risk involved for capitalists. One sector that is able to sustain the pandemic is the SaaS industry. With more number of people working from home now than ever, industries prefer to deploy solutions that will be accessible for their employees from anywhere. According to the economic times, in India the SaaS industry has seen a 60% spike from last year.

Also, most of the SaaS companies have increased their credit and trial period keeping in mind the situation. This simple approach increases customer loyalty and brand awareness among the customers and potential users. 

Not just now, if we look at the stats from the great 2008 recession, the stats show that the companies did really well when compared to the companies related to other sectors.

SaaS Model

The key takeaway is that the SaaS companies were and still are resilient to economic downturns. According to a survey conducted by SaaS capital, about 80% of the companies continued to grow during critical situations as today and still witness profitability. 

Top SaaS trends that will change the perspective on the software industry

While SaaS platform is continuously growing, so are the trends. The need to make things simple for users is a driving force behind any product company. People evolve every day and what worked for someone effectively a couple of years ago might be considered as old school now. 

SaaS Model

Here are the top trends in SaaS

  1. Artificial intelligence
  2. Vertical SaaS
  3. API connections
  4. Increased thought leadership
  5. Migration to PaaS
  6. Micro-SaaS
  7. SaaS pricing policy change
  8. Platform unbundling
  9. Mobile-first development
  10. Branding developments 

Bottom line

SaaS model is the future of the IT sector. One of the greatest espousal for this statement is how companies with this model emerge out efficiently during economic downturns.  

From the investors’ point of view, SaaS models are resilient, although not bulletproof. This makes a huge difference. Having seen two really big recessions, the model still remains to grow at a consistent rate. This makes it more powerful when compared to the other existing models. 

If you are an entrepreneur trying to choose a model for your business, it is recommended that you try the SaaS model first. If you are looking for developers who can help you in successfully building this model head over to Crayon’d. We will take off your idea from there.

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