In the last decade, the software industry has evolved from an incomprehensible area to the most promising niche in the world. Today, users are not so interested in the creation of new engines or cars but more in watching how quickly and systematically software development makes their life more convenient.
Cloud storage technologies have not been on the market long, but have already managed to become a real discovery. Their usage allows developers to guarantee the safety of data, whether it is a photo from vacation or an important piece of code.
Software distribution has been a trend since its inception and later became a separate direction. It is the distribution of software development as a service, which is called SaaS.
Are you curious to know what the SaaS industry is, and what top trends will dominate in 2023? If so, let’s jump in!
Software-as-a-services (SaaS) is a software licensing model that users can access on a subscription basis, with the application located on external servers. More commonly, companies provide SaaS services on hosted platforms. The main advantage of the SaaS model is that its software development products are easy to maintain. Let’s take the example of Google Docs to explain to you better what SaaS means. It is free of charge and no installations are required. The only thing you need is a personal Google account. What is great about Google Docs is that they automatically save any changes and edits to your documents.
So, will the SaaS industry market grow? Some sociological forecasts prove this fact. For instance, digital marketing SaaS provider, SilkChart, raised the most significant seed amount of $5.2 million. Interestingly, the United States has more SaaS companies than any other country. Both UK and Canada have 2,000 SaaS companies each. Germany and France each have 1,000 SaaS market players to tie in third.
The SaaS industry is constantly evolving, and new trends are currently emerging. In our article, we’ve picked up the top 10 trends in SaaS to be considered in 2023. Let’s take a look at them one by one to get the most out of the SaaS opportunities!
Features of the SaaS model
Working via a web interface
When using SaaS, you need: installation files, folders and documents on your computer. All data is located on the servers of the service provider — in the so-called “cloud” storage on the network. You get remote access to the program and can work with it in a browser from anywhere in the world where there is the Internet. At the same time, there are SaaS that you can buy and install on your server.
Payment for access
SaaS payment models are quite varied. First, let’s consider the most popular one. In this case, the user does not purchase an expensive entire software license, as when buying a hard disk or downloading installation files. Nor do they pay high development costs, as when ordering a custom solution. It’s as if he leases the service, paying a monthly or more subscription fee for access to the functionality.
According to the standard scheme, the payment will be renewable, so it is also called a subscription. The client pays for the use of the service during the agreed period, for the number of users, for the number of certain actions in the system, etc. For example, in terms of CRM, the fee depends on the number of employees who are working with the program at the same time. As a rule, it is more profitable to pay for such digital services in advance — in this case, the user gets tangible discounts and bonuses.
Some SaaS offer a limited set of features for free, and for access to advanced software capabilities, you have to pay a subscription — this is the freemium model.
Why is SaaS the Future of Software Distribution?
At the beginning of this article, we talked about cloud storage, and for a good reason. The point is that SaaS software distribution needs to offer users more than just access to the industry. That’s where cloud services come into the IT scene.
By providing SaaS software, many companies give users access not only to the product itself, but also to cloud storage. Thus, you can be sure that your Photoshop project will be saved, even if the electricity goes out at your house and the operating system “decides” to self-destruct.
SaaS products are all around us, but what does the future hold? There is no definite answer to this question because this technology has many applications. At the same time, we can predict the future of SaaS by looking at the latest SaaS trends. Here is the list of them.
1. AI Algorithms to Enhance Security of SaaS
AI technologies jump on the bandwagon of fighting cyberattacks. Kevin Skapinets, a Vice President of Strategy and Design at IBM Security, thinks that AI algorithms are helpful in detecting and predicting the common patterns of threats. So, how can Artificial Intelligence be at hand? By implementing this technology, it’s possible to identify malware and ransomware attacks before they enter a software system development. Automation is another advantage of AI in strengthening data security for SaaS. Oracle, a US computer technology giant, applied this trend to its services and expanded one of them — Cloud Access Security Broker. As a result, developers managed to fasten the process of threat detection with AI algorithms.
2. The Boom of SaaS Products for Remote Work
According to TechCrunch, there are many great SaaS tools on the market that might get new usage now as the novel coronavirus outbreak continues to spread into new regions of the world. Let’s mention some software development instruments that will be at your fingertips when you work from home. Need to organize a webinar, conference, or business meeting? By installing Zoho or other SaaS-based products on your device, you’ll manage it without a hitch! With Zoho, you can conduct a 40-minute meeting with 100 participants for free. How about communication? Slack, MatterMost and many other SaaS tools will help you to keep in touch with your teammates and make sure everything is on track.
3. White Labelling in SaaS
White label is a partnership in which one company produces a product and the other sells it under its own brand. Each participant in the transaction fulfills their obligations. This format establishes the mass production of consumer goods. The main advantage is that the product enters the market under various brands and at different prices.
The most popular format of interaction is between the seller and the manufacturer. The manufacturer hands over the product to the seller. And the latter provides financial and marketing resources for the promotion and sale of goods/services. This is how two of the same goods appear on the market.
This collaboration is good for both sides of the contract. The seller builds up the customer audience and gets additional profits. The producer creates a product with low production prices, minimizes costs of marketing and advertising, and pays for the services of related specialists.
White labeling in SaaS helps entrepreneurs enhance their branding without extra costs on infrastructure or development. Among the famous SaaS white labeling companies, there are:
- Weblium, a website constructor
- AppInstitute platform for app development;
- Flywheel — a web hosting platform.
4. The Growth of Low-Code Platforms
Low-code is a method of designing and developing applications using intuitive graphical tools and built-in features that reduce traditional (professional) code-writing requirements. Professional programming remains part of the process, but low-code development supports an augmented and simplified experience that ordinary users can quickly master.
The low-code platform market will continue to evolve in the future. In 2022, its annual growth is estimated at $21.2 billion, which is 40%. A product manager from Zoho Creator, Tejas Gadhia, mentions that most of the productivity tools for employees will be low-code. By the way, low-code platforms are beneficial for developers to create drag-and-drop interfaces and integrations flawlessly. High productivity and faster iteration are among the numerous benefits low-code platforms deliver. Here are several examples of low-code platforms as a service used by companies to optimize their working operations:
- Kissflow — a SaaS workflow management instrument;
- Mendix — an app development platform;
- Salesforce — a cloud platform computing service that offers CRM solutions.
5. The Emergence of Vertical SaaS
The vertical SaaS model focuses on the specific needs of a single industry in contrast to the horizontal one. Salesforce, SAP, Oracle, and many other renowned companies started as horizontal SaaS products. But they changed their marketing approach and implemented the vertical SaaS model to attract more clients and grow profit.
All business owners realize the importance of positioning their companies as industry leaders. That’s why more and more entrepreneurs are now using a vertical SaaS model, which is more industry-oriented than a horizontal one. Not only the business sees a vertical SaaS model as an opportunity – investing companies do the same by funding successful ventures. Have you heard about Meicai – a Chinese platform as a service that connects vegetable farmers with restaurants? Tiger Global Management and Hillhouse Capital, a US investment firm, gave between $600-800 million to this venture in 2018.
6. The Rise of MicroSaaS
A microSaaS is a small instrument developed by one person or a group of people to improve the functionalities of existing micro SaaS products like adds-on, extensions, and so on. So, why is microSaaS trendy? It helps business owners outpace key competitors and find a unique niche in the market.
The other benefit of microSaaS products is that they don’t need additional overhead from outside investment companies. Have a look at well-known companies that applied the microSaaS approach – Grammarly, an online editing tool, and Social Sprout, a social media software instrument. Both of them have $200 million and $111.5 million of total funding respectively, and they still occupy leading positions in their fields.
7. The Need for API connections
Businesses seek to provide well-integrated modern solutions to their services without creating a new IT ecosystem. That is why SaaS products must have more APIs to ensure data will be seamlessly integrated with existing IT infrastructure. LITSLINK’s high-end software development follows this approach to provide top-notch SaaS and cloud app platform services.
Daniel Levine, a business partner at Accel, believes that APIs tremendously impact SaaS development as they help ensure high extensibility and seamless integration. Have a look at Stripe and Plaid. Stripe, an online payment platform for running businesses online, focused on the API-first approach and generated over $22 billion. Plaid is a platform that connects banking data and accounts with apps. In 2019, the company collected $2.5 billion.
8. Product-Led Growth (PLD)
It’s a go-to-market tactic that relies on a product to acquire, retain, and engage clients. How can SaaS companies use this approach? They focus on consumer-like virality components for their product feature set and ensure hassle-free sign-up that doesn’t require a credit card for setting up an account. MailChimp, Slack, and Dropbox use this strategy to engage their clients and attract new ones. So, will a product-led growth method be popular in the SaaS market? Sure, it is expected to gather steam soon. HarshiCorp, which specializes in cloud automation infrastructure, successfully applied this trend. With this strategy in mind, the company increased its value to $1.9 billion and gained 45 million downloads.
9. Migration to PaaS
The SaaS market is in high gear of competition that leads companies to look for new ways to improve their products. PaaS (platform-as-a-service) is often an appealing option for companies in terms of product development and customer retention. Thus, many of them choose to migrate to scale their products further.
So, what are the key benefits of PaaS? In terms of the development process, PaaS is characterized as a highly scalable, agile, and fast alternative to SaaS. For businesses, it’s easy to build custom applications as add-ons to their main to ensure their superior flexibility. Box and Salesforce, SaaS-based market leaders, have recently followed this trend and migrated to PaaS By doing that, SaaS vendors strive to enhance client retention and increase demand for their services.
10. Mobile-First Approach in SaaS
As the name implies, the mobile-first strategy involves designing a website interface primarily focused on mobile devices. The philosophy behind this approach is that first, a prototype design is created for the smallest screen, and then developers move on to larger displays. This is the main difference from the classic desktop-first approach, which web professionals have been using for years.
According to the figures from Statista, the number of unique mobile users was 4 billion in 2019. As of January 2021, there were 4.18% unique mobile users and 4.54% active Internet users in the world. The number of mobile users is still increasing, which forces SaaS companies to adapt their services to mobile devices. Dropbox, Skype, and many other renowned companies implemented the mobile-first approach in their business models. SaaS-based project management and communication tools like Trello, Jira, and MatterMost have mobile versions as well.
Now, you are aware of the top 10 trends in SaaS that companies will definitely see in 2023. AI solutions, remote and mobile-first approaches, white labeling, low-code platforms, vertical SaaS, microSaaS, API connections, PaaS, and product-led growth may help to boost your business and make it more efficient. Catch on to these trends to outpace your competitors, acquire new clients, and generate more revenues!
So, if you seek a reliable technology partner for SaaS development services, contact LITSLINK and our software development experts will gladly help you to make your product stand out!