If you are a business owner in 2018, you’ll need two things to survive – Internet and SaaS. According to this SaaS forecast report by Statista, the size of the cloud market is literally skyrocketing. Everyone is becoming more and more used to the public cloud. Whereas, small and medium businesses are discovering the beauty of private cloud by accessing information from anywhere anytime.
If you talk about India, the SaaS statistics according to this Google Accel report are quite impressive as well –
- Global $132 billion industry by 2020.
- India is likely to grow to a $10 billion revenue industry by 2025 (8% of global SMB SaaS)
- India is a mobile-first country and likely to become the second largest SaaS consumer after the USA
Here are a few reasons why SaaS is so famous worldwide today –
- SaaS is more stable today with legacy software companies consolidating their hold, while customer adoption is reaching maturity.
- As APIs and SDKs become cloud important features, developers are taking charge of SaaS adoption
- Cybersecurity scares highlighted by Panama Papers has created a newly found love for private cloud
Let me discuss these points in a bit more detail so that we can swallow the impact SaaS has worldwide –
Saas is More Stable Than the Last Two Years
According to BVP State of the Cloud 2017, DropBox is the fastest SaaS company with $1 Billion Revenue Run Rate i.e. 8 years. The paper cleverly brings out the reason behind the sudden growth of SaaS companies in the last month of the fourth quarter globally despite its slow growth in the first three quarters (against what Gartner predicted).
It lays out three basic questions that every small SaaS company owner should be asking himself –
- How fast should I be growing?
- How much should I burn?
- How much should I Scale?
The fact that more and more legacy software are getting into the SaaS business in the previous two years is a glowing example of SaaS growth. The fact that they are ready to put their existing on-premise business to risk and join their rivals adds a layer of positivity to SaaS growth in the future.
Another factor is the declining churn rate. While comparing two studies performed in 2015 and 2016 respectively, the churn rate didn’t go up at all. (You’ll find the studies on the internet).
If you are really bent on checking the facts, go ahead and check this metric from these two reports yourself –
- Private SaaS Company Survey Results churn rate à 5% and under
- InsightsSquared SaaS Benchmark churn rate à3.1%
In summary, SaaS growth is much more than the previous two years.
Dominant Developer Decisions Overtaking Cloud
When you go out looking for SaaS platforms that are gaining rapid traction, you’ll find that most of them are targeting less tech-savvy end-users with less coding knowledge. This stark contrast when compared to on-premise solutions or IT solutions(targeting the IT team of an organization) has become a major differentiator and value proposition for the SaaS-verse inhabitants.
The tech guys making decisions as to who will be using their product has been advantageous for both the business owner as well as the end customer. According to the BVP cloud study, there has been a growth in developer-centric businesses. For example –
Twilio & Atlassian were the two largest IPOs recently, vendors that offer solid SDK and APIs for open-source language scripting or mobile integration. See that? Every key decision came down to the technology guy. Another driver that pushes the trend towards developer-centric solutions is the growth of vertical SaaS. SaaS has grown in the several major sectors as well like – energy, government, healthcare and more.
The Rise of Private Cloud
Even as enterprise cloud drives SaaS growth, large companies are majorly attributing this growth to the private cloud. According to a Forrester report, 44% of decision-makers for enterprise solutions said that public cloud was taking the backseat and the private cloud was gaining more traction.
One major reason behind such momentous rise can also be the cyber security risk. According to the BVP report, data breaches cost organizations over $4.2 billion i.e. four times more than the last year. Thanks to Panama Papers, the security breach has put 12 former US country leaders, 2 lakh companies, 30 Forbes listed billionaires, trusts, `and foundations at risk among others.
Companies are looking towards migrating towards cloud not just for the benefit of their data but for the benefit of their customer data as well.
What Does The Year 2018 Hold in the SaaS World?
I would like to end this blog with a few points that should tell you clearly what to expect from SaaS in 2018 –
- Exponential growth of AI
- Diverse team Advantage
- NPS is still there to rule
- APIs will be the backbone of majority software infrastructure
- Keep working hard to grow your SaaS business