Few business models have taken off in quite the same fashion as software as a service (SaaS) over the past decade — and the numbers are more than telling. According to a recent report by Research and Markets, prior to the COVID-19 pandemic, the global SaaS market stood at US$192.1 billion in 2019. Within the next two years, however, the market is expected to grow at a compound annual growth rate of 10% to hit US$253 billion by 2023. Meanwhile, Gartner believes that cloud spending will likely exceed 45% of all enterprise IT spending by 2026, up from less than 17% in 2021.
The transition from install-and-run software to SaaS, or as the industry refers to as “SaaSification”, is nothing short of dramatic but what explains the sustained enthusiasm? What is the next step in SaaSification? What must organisations take into consideration before investing in SaaS?
From a supporting role to a showrunner
There was a time when organisations purchased software the way they purchased office equipment: as tools to enable other business functions. This made perfect sense, at least in the pre-digitisation era. Back then, enterprise software products were not nearly as sophisticated as they are now because they did not need to be. They also played a largely supportive role to the business, such as simplifying communication, facilitating collaboration and streamlining various processes.
Over time, however, the role of enterprise software saw a sea of change. Instead of playing a supportive role, they are now coming to the fore. Entire organisations and business models are built on software at times. “SaaSification” has successfully penetrated different organisations and industries, and for good reasons, too.
First, it’s about the cost benefits. While the upfront cost of adopting SaaS from scratch might look intimidating, investing in anything new always does. The true cost benefit of SaaS, however, comes further downstream if implemented correctly. That’s because, since SaaS usually resides in a shared or multi-tenant environment, the hardware and software licence costs are much lower compared to traditional models. Finally, since maintenance is done by the SaaS provider and not the user, the cost is borne by the entire customer base.
SaaS also has a distinct advantage over the traditional model in that the software is already installed and configured. This means that, should an organisation need more storage or computing power, all it has to do is to provision the server in the cloud. Within hours, the application is up and running. Not only does this reduce the time spent on installation and configuration, it reduces the issues that can often get in the way of software deployment.
Speaking of needing more storage and computing power – since SaaS sits in cloud environments, it is much easier to scale up (or down) depending on the organisation’s business needs, which may change due to internal and external factors. All the organisation has to do is to enable a new SaaS offering and the SaaS provider will take care of the server capacity planning and maintenance on the back end.
In a nutshell, SaaSification enables organisations to gain complete observability, resolve problems faster, drive efficiencies with automation, and save cost — but it is evolving as we speak. Beyond cloud-based services, “SaaSification” is also about tapping the service provider and gaining access to several years of technology-partner experience to monitor and maintain operations. Essentially, this is the next step in SaaS: where technology and human expertise combine to deliver a software solution that’s better integrated into an organisation’s IT infrastructure and workflow.
This could come in the form of experts on demand, who can help customers break down adoption barriers and drive results throughout the project lifecycle. They can even provide consultative advice and guidance around various IT initiatives, such as cybersecurity, cloud migration, and learning management systems. In short, it’s not just about the software and the service they provide — it’s the experts behind the software, as well.
How do we start?
Just because “SaaSification” is the way of the future does not mean that enterprises should purchase the next shiny new thing that comes their way. Instead, it would be wise to consider all available information and business implications before making the call. Organisations should start by assessing what their actual needs are; never put the cart before the horse when it comes to technology investment. Essentially, it comes down to asking yourself these questions: What are the pain points? Why is the current technology not good enough? These should help narrow down your options.
Cloud-based solutions do come with hefty price tags at times, but you do get what you pay for. Even if the IT teams understand the value of a piece of technology, it is another thing to convince the higher-ups to loosen their coffers. As such, aside from understanding the problem, studying the cost and choosing the price tiers and features you need, it is critical for IT teams to justify the cost and convince various stakeholders of the technology’s long-term value.
Lastly, organisations should pay attention to security. The fact of the matter is that, while SaaS products provide convenience to users, they also provide convenience to attackers. Every external software that’s plugged into your system is a potential avenue for a cyberattack. As such, more than just a solution that fits your budget, it is important for the team to run audits, making sure that the product adheres to security standards.
As much as “SaaSification” is the way of the future, the barriers to adoption are real. SaaS is also not a silver bullet that will immediately solve all your business challenges. That is why it is important to find a partner who can help implement the right SaaS solutions without extensive overhauls to the current system. SaaSification is also a long-term commitment, and finding a partner who can provide long-tail support is also critical to success.
Ultimately, more than the technology, it is the people behind the technology that makes all the difference in the world. Having the right solutions and partner vendors is how businesses create “SaaSification” success stories of their own.