The popularity of SaaS is growing. As more people opt for the service model over traditional software installation. As its name implies, this type of application provides an alternative to installing programs on your PC or Mac. You can access them from anywhere with an internet connection. Those days are gone, where you needed such hardware. Now everything is at our fingertips online through web apps.
History of SaaS
The idea of software as a service (SaaS) was born in 1990. When employees at one company would connect over an in-house central server to access all the applications and services. While webmail, bookmarking, photo sharing were among some early SaaS apps for consumer business. Back then very few people knew about it or they barely used them daily lives.
In the 2000’s, SaaS started becoming more and more popular with entrepreneurs. They believed that this new technology would be able to solve the problems in Future. Salesforce is one of many companies who have made successful apps for consumers or small businesses. Through browser access over internet lines not physical products like Microsoft Office. Which was still around at time they launched theirs service.
The Salesforce platform jump-started a new industry and forced other SaaS companies to follow suit. With its success in the market. It became clear that there was no future for disks. Only cloud solutions like those offered by Amazon Web Services (AWS). This led directly to the new SaaS products in marketing automation software, CRM systems, billing platforms, etc.
Today SaaS is expected to grow to $272.49 Billion in 2021 from $225.6 Billion. In 2020 at a compound annual growth rate (CAGR) of 20.8%. To a large extent this was influenced by COVID-19. As the pandemic took hold of entire world, work from home drove the demand for digital solutions. Due to Covid-19 restrictions, every business had to go remote. All face-to-face business dealings were no longer possible. As soon it became evident that Covid-19 restrictions aren’t going anywhere soon. Businesses all over the world started to feel financial crunch. Companies started to get SaaS subscriptions.
In recent years, we have seen lots of the case studies. Due to large number of product launches in every industry including health, education, CRM, accounting, marketing, sales, security, etc.
Some of the successful products are
Canva is a graphic design platform. It is used to create social media graphics, presentations, posters, documents and other visual content. The app includes templates for users to use. The platform is free to use and offers paid subscriptions like Canva Pro and Canva for Enterprise for additional functionality.
It started back in 2012, when one of the co-founders – Melanie Perkins – was teaching students. How to use programs like InDesign and Photoshop software. People found hard to learn and even harder to use.
At the time, the only tools on the market for graphic design were far too ‘overpowered’ and complex. It was difficult for most people to use.
There had to be a better way for the average person to create beautiful designs. After realizing that this was a potential starving market. Melanie set out to create Fusion Books, which later evolved into a separate product: Canva.
“Helping everyone create beautiful designs without friction”
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Back in December 2013 James and Henley were building a product. They decided to build this product into a business. They formed their company in March 2014 and left their jobs to pursue this business. In September 2014 they launched their product.
At the end of 2015 completed their first fiscal year. They had over 150000 freemium users and 2000 paying customers. They had annual revenue of $2.5 Million
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Overview of Business components of SaaS
As mentioned above by 2020, the SaaS was starting to be understood in terms of a viable business model. A lot of debate took place around the economics of cloud computing. However little discussion has taken place around the additional components. That are needed to run a successful business. In addition to core infrastructure and basic platform.
Most vendors need a central repository of customers. The CRM system can sometimes be an external application. Core functionality in this area includes, sales activities (associating accounts with your team and forecasting). Though many also span into adjacent areas like customer support. Which Salesforce has been dominating lately as one solution provider to rule them all!
2. Marketing Automation
The need to manage the communication with prospects and customers is driving a solution space. That has been lesser-known, but increasingly important. Marketing automation tools can nurture leads by automating email communications. This helps sales people spend less time on unproductive tasks. So they’re able make more revenue per employee for your company!
In addition to the billing, most companies also need a recurring billing system. This type of process helps associate customers with plans (for use in charging them) and usage-based rates like storage or minutes. Which can be charged accordingly each month.
4. Customer Analytics
Customer analytics is not a new concept, but it has recently been popularized by Google Analytics. This type of customer analysis helps SaaS providers to better understand the behaviors and needs within their application. As well potential elsewhere on the web or mobile platforms. Such that they can provide more relevant services for customers. Who are using those devices/applications productively. Instead just looking at them passively through browsing activity data like most websites do now days.
Finally, we have an open-ended space. In past it may have been called the help-desk or customer support. Now includes tools for core product issues like Zen-desk. Along with collaborative ideas and feedback forms not to mention live chat. To build communities of users. Who get superb service without any hassle from their side is main goal here!
The rise of SaaS is undeniable. Organizations are embracing cloud-based solutions for their technology needs. Whether it’s a CRM system to keep track of sales leads or HRIS software to streamline employee onboarding but the question is what will future look like?. We can only speculate about what future holds. One thing that seems certain. Its that people want easy access and straightforward pricing models.
What does your company think about this shift towards simple business systems?
Let me know by leaving comments below!
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