*This post was written by Niraj Ranjan Rout from Hiver*
Whether people realize it or not, the SaaS industry has been around for more than a decade.
As more and more company leaders become increasingly aware of cloud computing and of the advantages that hosted infrastructure offers, SaaS solutions became more popular.
The market has grown considerably over the past few years and is expected to expand as more individuals in the corporate world become aware of the varied range of benefits that SaaS provides. SaaS has often been heavily focused on customer success, which is likely one of the reasons why it’s evolved at such a fast pace every year.
As the technology changes and customer expectations change, so does the SaaS industry.
Here are some interesting emerging trends in the SaaS industry.
1. Vertical-specific SaaS applications are going to be more prevalent
Previously, the SaaS industry has mostly focused on serving broad business functions such as sales, accounting, HR, CRM, etc., but one type of enterprise software usually doesn’t fit the needs of all possible customers. For example, a telecommunication provider would prefer a software that is designed for the telecommunication vertical over a software that is not industry specific.
Vertical specific software solutions address all the requirements of the customers in their target niche. That is why most emerging SaaS companies are focusing on building vertical-specific SaaS applications, a sector also known as industry cloud.
In fact, according to Gartner, vertical-specific software represented the largest segment of the worldwide software market in 2014 with $114 billion in revenue.
2. Moving from SaaS to PaaS
After reaching a certain level, the focus for a SaaS provider shifts from customer acquisition to customer retention, and one of the best ways to do that is to provide a Platform-as-a-Service that lets customers create add-on apps to their original product.
One example is Salesforce, which launched a Force.com platform. Other leading companies such as Box, have also done the same. Almost all SaaS companies I know are working towards moving from a SaaS to a PaaS. In fact, at Hiver, our roadmap is heading towards creating a full-featured platform for email users.
An increasing number of SaaS providers, depending on their growth rate in the market are focusing on providing PaaS to their customers, and thereby aiming to completely take hold of the market in their niche.
3. Change in trend for mobile-first SaaS
Previously, mobile-first SaaS companies easily succeeded in areas such as productivity apps or industry-specific applications and it was relatively hard for these companies to succeed in broader areas such as marketing, sales etc.
But currently, the transition of messaging apps such as Whatsapp to real platforms may encourage a new trend for mobile SaaS. These messaging apps are the catalyst many startups need to shift to mobile.
4. Unbundling of SaaS
Recently, a number of startups have begun focusing not on offering a full-featured product, but rather packaging their core services as an API, and a suite of small tools.
Take Clearbit for example, an API which allows you to enrich users/contact data. Instead of offering ‘a contact enrichment tool’, which was how it was done traditionally, it has packaged the software as an API and a collection of add-ons to work in tandem. It lets clients create their own user experience (UX) depending on their needs.
As some SaaS industry categories are getting overcrowded with a number of similar products, more and more startups will start focusing on unbundling these features, to offer tailored but rich, user-friendly services.
5. Micro-SaaS businesses will rise
On one hand, due to the increasing competition in the SaaS industry, businesses are finding it hard to scale, and as this continues, there has been a rise in the number of micro-SaaS businesses.
Usually, micro-SaaS businesses are run by a small team, sometimes even by a single person.
These products are often complementary add-ons which aim to improve a missing feature, enhancements to the original SaaS product, or tools which might not have big enough markets but aim to completely dominate their niche.
As the market for SaaS matures, we will most likely see many such micro-businesses starting and maybe even thriving.
6. Integrating market dynamics in their business model
More and more SaaS businesses are aiming to integrate marketplace dynamics into their business models and these marketplaces can include industry-focused/vertical players, not just horizontal players.
For example, a marketplace can enable a company’s users to book appointments and at the same time, it also provides necessary tools to optimize and manage these bookings.
The main reason for the rise in this trend is the market maturity. Not only new businesses but also existing ones will be more focused on offering such power tools to their customers, in order to stay on top.
Although there are a number of emerging SaaS companies whether it’s horizontal focused or industry focused, niche service or a complete package, a SaaS product is only as good as the provider offering these services. Hence, it is important to make sure to pick a great company which is willing to innovate and change with the demands and the market.
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