Why your next Startup should be SaaS and how to build one?
During the covid19 epidemic, which generated problems and uncertainty for organizations all around the world, demand for SaaS innovations skyrocketed. Small and medium-sized companies(SMB) were compelled to accelerate their digital transformation, which helped them survive the epidemic.
SaaS is a software license distribution model that allows businesses to put their software on the internet. SaaS platforms continue to grow, and their demand for software is also growing. SaaS is one of the three main cloud service models. The cloud storage market is anticipated to expand from US $50.1 billion in 2020 to US $137.3 billion by 2025, at a CAGR of 22.3 percent during the forecast period.
The SaaS Business model is growing in the B2B tech industry. Companies that provide software as a service (B2B SaaS) sell products and services to other businesses. A SaaS B2B firm, such as Google, Microsoft, HubSpot, Mailchimp, Slack, Salesforce is one that provides cloud business management solutions to the B2B.
SaaS B2C firms, such as Amazon, Facebook, Walmart, Alibaba on the other hand, offer items and services to consumers.
Let's take a closer look at why the SaaS business model is so popular and how to build one.
- Growth of a SaaS industry
- Why your next startup SaaS is superior to licensed software?
Investor interests in Recurring Revenue
Customer interest in SaaS
- SaaS technology trends
- Artificial Intelligence
- Virtual and augmented reality
- Distributing cloud
- No-code tools
- Vertical SaaS
- Mobile optimization
Growth of SaaS Industry
The SaaS sector has seen tremendous expansion in recent years. Companies that provide software as a service (SaaS) are growing at a breakneck speed. According to all analyses, the compound annual growth rate of SaaS will not be less than 10% in the next five years. The most promising study is from Business Research Company, which is released in early 2021.
The SaaS industry is expected to reach $272.49 billion in 2021 (a 20.8 percent compound annual growth rate) and expand to $436.9 billion by 2025. (CAGR 12.5 percent ). CAGR is the most commonly utilized metric by investors to assess a company's or industry's potential.
Public cloud platforms, business services, and apps, according to Bloomberg News, are growing increasingly popular. So far, $6 billion has been invested in Indian SaaS firms, with more than $4 billion entering in the previous three years alone. By 2025, Indian SaaS providers are expected to meet 19% of worldwide SaaS demand.
Worldwide Public Cloud Service Revenue Forecast (Millions of US Dollars)
The majority of SaaS systems are automated, allowing users to outsource manual chores to algorithms. AI enables consumers to make the most of their time by providing effective automation. Machine learning as a SaaS has exploded in popularity. Machine learning on SaaS has grown in popularity and it has generated "machine learning as a service", which is predicted to expand to the U.S $20.8 billion in 2025.
It is important for this business in this space to stay up-to-date with the latest technology trends, changes, best practices in user experience design if you want your product to remain competitive on the market. The following are some of the most successful SaaS startups, which have helped to define the growing ecosystem.
Why your next startup SaaS is superior to licensed software?
Licensing software is an expensive process for small businesses. The cost of licensing software is the first thing that many business owners cut when their company begins to struggle. License fees can run into thousands of dollars per year, and if the business goes under, so does its investment in licensed software.
The solution lies in SaaS or Software as a Service platform that offers affordable monthly subscription plans instead of paying once for every license. You can easily adapt your application to consumer needs and requirements without having to invest in upgrading the software every time you want to add new features or fix bugs. When it comes to handling customer data, SaaS solutions are superior too because they provide more security than most other options.
Investor interests in Recurring Revenue
SaaS is an appealing business model for entrepreneurs since the income stream is predictable, as end-users pay monthly, quarterly, or yearly. The end-user will pay for the service within a specified time frame, known as the customer life cycle, in the recurring revenue model. If a consumer is happy with a service, he will maintain it for a long time, and the seller will reap additional benefits from the customer over time.
Customers, on the other hand, who are dissatisfied with the service will rapidly stop paying and leave. Because the cost of acquiring subscribers is generally quite expensive, this might result in a loss for the software supplier. Customers must be acquired and retained in order for a SaaS firm to succeed.
Recurring revenue is a crucial statistic for determining how much money you spend on marketing, sales, and other expenses. The majority of SaaS companies generate revenue through a subscription-based model.
Investors prefer recurring revenue due to the following reasons:
The recurring revenue business is easier to build since it generates predictable cash flow to spend in business expansion. Companies may understand their cash flow and invest efficiently in business growth with minimum risk. It is definite that if the product or service achieves scalability and subscription value, it will reduce customer churn and increase recurring income from current pleased consumers.
When everything is predictable, you can make business judgments ahead of time. There will be adequate notice and opportunity to reschedule in the event of unforeseen changes.
You may utilize the information obtained to decrease risk while making crucial decisions on how to launch a new business or reduce customer turnover.
If your needs change, you may increase or decrease your membership, as well as speed up or slow down the process. This is advantageous to both your consumers and your company.
Customer Interest in SaaS
The SaaS platform is easy to start and use, and you can develop on its own without the involvement of the techies. Today, almost every company and the majority of customers utilize SaaS.
- A no-code SaaS platform is a quick and easy method to get your business up and running. These platforms enable entrepreneurs and start-ups to create completely working software without having to know how to code. These platforms are becoming more popular as a way for enterprises to save money on development and technical skills.
- SaaS programs may be accessible from any device or location, giving your employees technological independence. Users do not need to download or configure software packages on their computer systems, which is one of the key characteristics and benefits of cloud solutions.
- It is possible to save data on the internet. Data may be exchanged fast and effectively among several users.
- Subscription payments are frequently inexpensive, allowing you to spread out your investment.
It is also critical to stay up to date on the latest trends in the SaaS market when working in a fast-paced business environment. Examine the trends that are driving the entire market and follow those that will ensure your success in business.
SaaS Technology Trends
Artificial Intelligence (AI) software is a computer program that learns diverse data patterns and insights to replicate human behavior. Top AI software features include AI platforms, machine learning, speech and image recognition, virtual assistants, and so on. AI advancements have created a slew of new SaaS options.
AI and machine learning are used by SaaS companies to help in customization and also developers to improve their coding skills. Automation reduces expenses by eliminating the need to hire new workers to handle additional work. It can drive predictive analysis to produce a better user experience and eliminate SaaS churn. AI enables SaaS security services to replicate and learn from new security worries on their own.
Artificial Intelligence Revenue world market (2016-2025)
From now until 2030, it is projected that the AI GDP would rise by 14%. This suggests that in the coming years, early birds will have a significant edge. Google Cloud Machine Learning Engine, Google Assistant, Salesforce Einstein, Azure Machine Learning Studio, and Amazon Alexa are some of the top artificial Intelligence Software available on the market.
Read more: AI SaaS is Here to Stay
Virtual and augmented reality
Augmented reality (AR) is a technologically augmented version of the real world that is produced via the use of digital vision, sound, or any other sensory stimuli delivered via technology.
AR and VR eliminate the distinctions between the physical and digital realms. They provide a new way to engage with consumers, coworkers, and the environment around us. 3D high-quality video and audio are used to show Augmented Reality (AR) and Virtual Reality (VR). AR is currently used in health care, automotive industry, retail, learning and development, real estate, interior design, events and conferences, tourism, and mapping.
Global enterprise virtual reality hardware and software revenue by segment
Microsoft bills itself as the "industry leader in mixed reality." When used in the real world, mixed reality refers to the combined power of augmented and virtual reality. Microsoft has announced the deal for over 120,000 headsets could be valued at up to $22 billion with the U.S Army for AI headgear, software, and services. Microsoft refers to this system as the Integrated Visual Augmentation System, and it is tailored to the demands of the Army (IVAS).
Niantic, a Google spin-off, was formed in 2010 with the goal of using augmented reality to "enrich our experiences as human beings in the actual world." created the famous Pokemon Go game, which brought in $2 billion in in-app purchases. Some of their games include Ingress Prime and Harry Potter: Wizards Unite.
Distributed cloud technology brings public clouds closer to private networks and specific locations, resulting in a smoother, lower-latency process that requires less bandwidth and storage. As a result, artificial intelligence, Internet of things (IoT), and robots may benefit nearly any company or organization, regardless of its size or budget.
The usage of Zoom in distant work, distance education, and online social connections have risen considerably during the Covid19 epidemic. Zoom will be the fifth most downloaded smartphone app in the world by 2020, with 477 million downloads.
Read more: Cloud computing
No code tools
No code platforms are becoming extremely important. Anyone can use these tools to perform jobs even if they don't know how to code. Their user interface and user experience (UI and UX) are straightforward that anyone can carry out tasks with just a few clicks and save lots of development time.
Undaku no code solutions can help SaaS businesses in reaching out to a larger audience, resulting in increased sales and income. This robust platform helps you to create MVP in a matter of days and expand your business.
Vertical SaaS is a powerful platform that deals with business-specific needs and allows them to modify to their hearts' desire. This is the best SaaS trend for businesses who want to personalize their acquired software to the very end and want to convert targeted leads.
Faster time to benefit, frequent software updates with seamless upgrades which allow rapid innovation, provides strong integrations with other products, regularly push best practices back into the product, and benchmark the solution against rivals, the ability to keep track of these constantly changing and complicated regulations. are some of the advantages of vertical SaaS.
Vertical SaaS providers will continue to emerge as developers compete to stand out in an increasingly crowded market.
Read more: Vertical SaaS (Software as a Service)
According to an eMarketer poll, a common person spends 120 hours each month staring at their phones. Furthermore, according to a recent CNBC estimate, the percentage of people using smartphones to access the Internet will increase to 72.6 percent by 2022. Moreover, smartphone optimization includes filtering, the most recent updates, and virtual reality.
Number of smartphone users (worldwide data from 2016-2021 in billions)
SaaS firms that incorporate mobile optimization have risen to the top of the market trends list in the digital era, thanks to the mobile-centric generation. It allows them to be more versatile and expand their businesses.
Many SaaS business models benefit enormously from the advantages, but the difficulties or drawbacks of SaaS are significant and should not be overlooked.
Difficulties in making a SaaS product Explained
According to Gartner, public cloud sales will reach $278 billion by 2021. The fact that the industry has grown so competitive is also one of the problems of SaaS. Here are some of the pain points included in building a SaaS application.
- Customers will no longer be able to use an older version of the app if they desire it.
- When migrating to a SaaS model, there is the possibility of software integration issues. An up-front integration strategy must be created to ensure that the technical requirements for current assets are satisfied.
- How long does it take to develop a software-as-a-service product?
It might take anything from 2-10 months, and potentially longer, but it shouldn't take more than three months for most SaaS MVPs.
- In the event of a data breach, the firm (rather than the cloud vendor) is liable and might face legal action.
- The performance of the program is hampered by slow internet connectivity.
- Identify who is your target audience, and how are you going to obtain them? What is the problem that your target is trying to solve? What criteria do they use to compare and choose items? How will your customers profit from your offer?
The graph below shows each stage of SaaS, what you should concentrate and the right time to grow your business.
- Cloud computing has a significant risk of accidental exposure if organizations do not use mature secure-by-design cloud concepts from the start.
- Invest in tooling and product development teams.
- Teams that haven't been reformed to accommodate cloud-native operating models need to be reorganized to focus more on architectural interaction, feature development, and new self-healing and on-demand scaling capabilities.
- Customers choose a one-time charge payment plan over the more common monthly cost option offered by many SaaS providers.
You can attain faster growth if you can tackle all these problems. As organizations develop, so do their needs. Adapting to SaaS software is the only realistic option. Let's see how.
How to Build an Agile enterprise
In reality, going SaaS entails not only building differently but also using technology assets differently—from introducing a new, more modular approach that works in a stateless architecture design to changing how database services are accessed. Technology is now available to everyone thanks to cloud disruption. The future of business is no-code SaaS.Undakus’ no-code application development platform offering allows all the necessary features to build a full-scale enterprise app development, startups to accelerate their time-to-revenue, multi-tenancy support, multi-region support, SaaS product development, SaaS transformation, integrations, flexible subscription management and invoicing, build custom microservices and integration, private cloud deployments, good user interface design and massively increase customer satisfaction across every client delivery action item.
Undaku can help you shorten your SaaS development timeframes and decreases your operational overhead during launch.
Get started for free!