Johannesburg, 24 Jul 2020
Software as a service (SaaS) is, without a doubt, one of the game-changing technologies of our time. Though it stands on the shoulders of many other innovations such as smartphones and broadband, SaaS reveals both the potency and simplicity of the cloud era in an easy-to-appreciate package. Even if business leaders don't always grasp the nuances of modern technologies, they have had far less trouble catching onto the benefits of consumption and opex models for software.
For this reason, SaaS is very popular: it is projected to be a $117 billion industry by next year and also reach 45% of all software spend in 2021. Practically all businesses use some form of SaaS, even if it's just a free Gmail account. Commercial and enterprise-grade SaaS is also prevalent, and there has been a real attitude change across the market.
"Go back even five years and you'd still have debates with companies about SaaS," said Dorio Bowes, Commercial Director – Southern Africa at Westcon-Comstor. "They might take on some smaller services, but the idea of running a major application as SaaS was not widely accepted. But now they will consider SaaS wherever it's available. Running applications that they own is no longer the gold standard of the best technology. Customers have become a lot more output focused, likely because sweating capex investments is no longer the only choice."
SaaS, he added, not only works well with that paradigm but was responsible for establishing it. So, if many companies are already dipping more than just their toes into SaaS, what are their future choices? How will they take it to the next level?
Four trends for future SaaS
As SaaS matures, its changes will be less obvious and tectonic. But there is a big exception to this – the rise of artificial intelligence. This category is quite broad, including machine learning, but also some levels of automated processes and serverless computing. Whatever form it takes, AI is now prevalent both as a service and as an important background mechanism to support more complex SaaS functions.
"You'll find more AI baked into SaaS, as well as more use cases to apply to your business," said Bowes. "You can start using modules that use AI, but you won't necessarily use the AI directly. This trend expands in two prongs. The first is using AI to manage the volumes of data we're generating today. The other is using AI for interface use cases, such as photo analysis for damage, or UI translation. But AI will be everywhere SaaS is."
Another visible trend, at least for SaaS customers, is the growth of vertical SaaS. This is SaaS designed for specific industries. Though such applications compete at certain levels with more generic SaaS, they tend to offer a better integrated service for the specific vertical, and add in details such as the right language and workflows. Though a smaller market than general SaaS, vertical SaaS is growing faster than its cousin.
Vertical SaaS exists because SaaS is a malleable and flexible development environment. It can facilitate many approaches and customer philosophies. The trend is evident in the burgeoning SaaS marketplaces running on platforms such as Office365 and Salesforce, where third-party developers create apps that run off SaaS platforms. The next evolution in this trend is 'micro SaaS'.
"Micro SaaS is a SaaS product made by a small team and for very specific uses," Bowes explained. "They often run on a larger platform to be easily available to specific users and teams, and they focus on those specific use cases. Many support API integration to work with larger systems, and they are becoming more popular for dealing with specific tasks in organisations. These are often built by specialists who understand the environment and processes they are trying to improve."
Micro SaaS is part of a larger trend. Instead of only catering to enterprise-wide applications, many SaaS choices also now try to accommodate teams and individual users. Some products intentionally only target five or 10 seats, meant for teams within an organisation. The aim is that you might deploy many different instances tailored to different teams. This granular focus on users will become a key differentiator of SaaS.
But the ultimate differentiator? It's oddly not AI or a surgical focus on specific users. Instead, the real game-changer that many companies experience from SaaS is API integration. An API (application programming interface) is effectively a way for two systems to communicate with each other even when they speak entirely different languages. An API is what links your legacy ERP with your shiny new CRM. Creating such connections between systems, especially to move data, has not escaped business leaders, 83% of whom find API integration critical to their businesses.
"Integration is very attractive to businesses, and it's become easier and easier to integrate different systems. Most software vendors have realised that customers aren't interested in single-vendor software environments anymore. They are focused on output and want the richness that comes from having best-of-breed applications interact with each other or with the same data. So APIs are definitely a trend to watch."
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