SaaS (Software-as-a-Service) has a long history with enterprises embracing the flexibility and lower costs that hosted applications, SaaS development programs and the expansion of PaaS (Platform-as-a-Service) and IaaS Infrastructure-as-a-Service) can offer their businesses.
According to Gartner, IaaS is forecast to experience the highest end-user spending growth in 2022 at 30.6%, followed by Desktop-as-a-Service (DaaS) at 26.6% (as a reaction to remote mass working) and Platform-as-a-Service (PaaS) at 26.1%
Speaking to Silicon UK, Jennifer Kuvlesky, principal product marketing manager, Snow Software, explained the commercial drivers behind the expansion of SaaS: “For organisations this shift to SaaS has important implications for their budget. Organisations need to start (if they haven’t already) assessing how SaaS will impact their budget.”
Kuvlesky continued: “For example, transitioning their budgets from CAPEX to OPEX for their software budget. SaaS must be a critical component of leaders’ plans for the future because it will only continue to grow. Additionally, budgets can expand with the ease of adding new capabilities, and leaders should stay on top of the growth of their application catalogue and the value they are deriving from those investments.
All businesses are looking to do more with less as they rationalise their budget to create lean agile companies that can operate efficiently to deliver innovation and world-class CX (Customer Experiences). SaaS is clearly a fundamental component that is driving these changes.
The latest report from Paddle indicates a rapid expansion of SaaS, with 57% of respondents in Europe and the US stating they increased spending on SaaS applications last year. And enterprises are expanding their use of hosted services. According to BetterCloud, 110 SaaS apps were used, on average, by organisations last year – an increase of over a third (38%).
And SaaS applications now have a commercial and robust component. For example, PwC looked closely at the value of CX and discovered that 43% of all consumers would pay more for greater convenience; 42% would pay more for a friendly, welcoming experience. And, among US customers, 65% find a positive experience with a brand to be more influential than great advertising.
However, Henrik Nilsson, vice president, Apptio EMEA, warns that SaaS expansion has had some unintentional consequences for some businesses: “Pushed by the need to move more operations and even day-to-day work online, rapid purchasing of new SaaS offerings without effective governance has left many companies with an unclear picture of how much they’re using their services, how much they’re spending, and which services they still actually need.
“All these inefficiencies take away from the value that SaaS is meant to deliver. One of the most common problems is a lack of stewardship over SaaS procurement and integration. Business units are all too often able to purchase and use new services without reference to the IT team or even the rest of the business.”
Nilsson concluded: “If the SaaS industry is to continue its rapid growth, there will have to be a change in how IT leaders manage its adoption, integration, and usage. Technology Business Management (TBM) tools are one of the most common SaaS management methods, as they can automatically gather-together all SaaS contracts, spending and usage into a single place, providing the transparency needed to ensure SaaS products are actually delivering value. Combined with effective governance processes around procurement, it’s an effective approach for avoiding the SaaS ‘hangover.’”
Also, the IT infrastructures that are needed to deploy and use SaaS applications and services effectively must be carefully considered, as Mike Kiersey, CTO, EMEA at Boomi, explained to Silicon UK: “Managing IT in the era of SaaS software has provided some big challenges, especially since the command-and-control model of old no longer works for most companies. Many challenges revolve around unnecessary costs, based on the general subscription models many of them follow.”
Kiersey continued: “This means many organisations using SaaS will face a lack of control – not great as we come out of a pandemic that threw businesses into a world of unprecedented conditions. In a cloud world, some of the biggest, and most detrimental pitfalls SaaS also faces are integration issues and hybrid infrastructures. This means many organisations will in fact be seeking multi-tenant platforms, like iPaaS that promotes B2B and cloud-to-cloud integration functions.”
The growth of the SaaS marketplace shows little sign of slowing. Technavio predicts the market will grow by an estimated 9% by 2023, translating into a value of $60 billion. “Apart from the increasing use of vertical SaaS, other factors such as the rising use of micro SaaS, increasing need for API connections, and strategic partnerships and collaborations between market participants will have a significant impact on the growth of the SaaS market size during the forecast period,” says a senior analyst at Technavio.
How businesses integrate SaaS applications into their workflows is also rapidly changing. Here, the low-code no-code approach is paying dividends, says Richard Mabey, CEO and Co-founder at contract automation platform Juro. “No-code or low-code automation is going from a nice-to-have to a need-to-have for forward-thinking businesses. As a result, we see customers taking the initiative and stitching together several tools, via a platform like Zapier, to create the exact workflow that’s right for their business.”
The implementation of SaaS applications across business processes is also a challenge that must be met, says Jennifer Born, Teamlead, Customer Success and Support, Filestage: “Businesses need to rethink the way of working they had before, as not everybody is in the office and a remote and agile way of working is essentially needed. They, therefore, look at all their processes and try to link them together. As a result, we often see that they are searching for a SaaS product and for a consultation on how to implement their complex workflows easily into a digital platform and may even simplify these.”
As the SaaS marketplace continues to expand, understanding the implementation challenges will be essential if businesses leverage their SaaS investments.
Snow Software’s Jennifer Kuvlesky warns: “IT no longer holds the purse strings for technology purchases so unless an organisation has strict guidelines and controls in place to manage SaaS procurement, most organisations are struggling to have full visibility into their technology investments which limits their ability to make impactful business decisions. This isn’t just about costs. The more applications you have the more risks you incur – financial risks and security risks. And you can’t secure what you don’t know you have. Visibility is a huge challenge.”
Flexible, agile, secure, and resilient are components of every post-pandemic business. Each of these pillars can be supported with well-chosen SaaS applications and services. The enterprises that make the right choices and integrate these tools to create seamless processes that support great CX will be the winners in the race to become masters of SaaS.
Danny Hudson, Director of CPG and Retail at FarEye.
Danny has over 20 years of experience working in the supply chain and logistics technology industries. His previous roles include working at SAP and IBM.”
How do you assess the current state of SaaS?
“The opportunities that SaaS can bring to enterprises of all sizes are truly monumental. It is no exaggeration to say that the realisation of SaaS’ potential will be looked back at as a defining moment in the evolution of modern business.
“SaaS market maturity varies between regions. In Europe, the market is less developed than it is in geographies such as the US. But in general, the full potential of the solution has yet to be realised by businesses everywhere. This is what makes it such an exciting time for this type of model and the organisations which have yet to leverage its benefits.”
Has the pandemic impacted the development of SaaS innovations?
“Being cloud-based in a tech-driven ecosystem, it is entirely possible to develop and innovate SaaS products without reliance on physical infrastructure. As a result, despite a small slowdown, the pandemic doesn’t appear to have significantly hindered innovation. However, it did influence innovation’s focus and direction.
“In logistics and supply chain, for example, demand heightened for safer payment measures and faster, more convenient deliveries to the doorstep. As a SaaS-based solution provider, we moved quickly to respond, evolving our software to offer enhanced functionality such as contactless delivery, paperless transactions, and options for same-day delivery.
“Other functionality we added in response to fast-changing consumer sentiment during the pandemic centred on health and safety measures. For example, FarEye’s intelligent delivery management platform (IDM) has allowed consumers to see their delivery driver’s temperature before they arrive [DT2] and contact them directly at the push of a button should they have special requests.
“Having to pivot quickly to offer our clients more during the pandemic has made us a more resilient and agile business. And as regions around the globe embark on economic recovery, these heightened consumer expectations have remained.
“This leaves our clients in the retail, food delivery, postal industries and more facing a very different landscape. And it is a landscape full of new challenges, new questions and the need to develop new solutions – all of which SaaS can certainly help answer.”
What are the current challenges facing enterprises and their SaaS environments?
“Although the benefits of SaaS models are myriad, there are always challenges when it comes to implementing and maintaining the momentum of new technology.
“One significant setback SaaS providers face post-pandemic is sourcing and retaining the best talent. The great resignation has impacted many industries, and technology is no different. If anything, the challenge is heightened in SaaS as, being a relatively young discipline, experience is difficult to come by, especially when this needs to be twinned with the niche skills required for continual improvement and innovation.
“Another unfortunate side-effect of talent shortage is a strain on existing IT resources. As a result, businesses must work harder to keep the lights on and ensure their key teams are not overstretched, motivated, and incentivised. There are also, of course, long-standing challenges around SaaS, including assuring security, data processing and integration with legacy infrastructure.”
How are enterprises integrating SaaS into their business processes today?
“One of the biggest tasks facing businesses today is digital transformation. Yet, whether they’re small independent businesses, start-ups, or larger, more established enterprises, a vast number still have yet to fully adopt and integrate their technology for the best possible outcomes.
“For our clients, SaaS is integrated to allow them to view, control, and streamline the process of supply chain management. Our IDM enables traceability from the first mile all the way to the last, from production to delivery to the customer.
“This allows our clients to have more visibility and control over their processes and empower their customers with greater control over their deliveries. This is key to offering a genuinely standout customer experience in a competitive marketplace.
“Removing the need to configure, install, maintain, and upgrade software in-house, SaaS can provide solutions to a diverse range of business challenges. From empowering them to better predict costs and scale according to demand to building automation, agility, and data-led decisions into everything they do.”
How are enterprises using SaaS with other technologies such as AI, automation and low-code development landscapes?
“AI, automation, and machine learning hold massive potential for the logistics and supply chain industries. However, not all clients opt for them or make full use of them, and for many businesses, they still seem a long way into the future. This is especially true for those that have not yet started or are at the early stages of digital transformation.
“However, we are seeing increasing demand for the use of IoT and blockchain item tracking, for example. Some businesses are taking full advantage of their configuration capabilities and are integrating technologies to work together, for example, IoT. On the other hand, some of our clients only want a specific part of AI or automation, such as route or loop optimisation.
“An example of how logistics and supply chain businesses might use SaaS and these technologies include using a SaaS platform to gather data, then optimising their processes with AI, using machine learning to store and cleanse address data for example, then linking GPS-enabled sensors on vehicles with apps for visibility and control across their processes. There are so many combinations of possibilities and so much potential.”
What does the future of SaaS look like?
“The global SaaS market is expected to increase in value by 27.5% every year to 2028 – a significant growth trajectory for any industry. This will be driven by several factors, not least organisations across both the private and public sectors permanently adopting home-working and hybrid working models.
“Cloud-based software and, within this, components such as SaaS are critical to making this happen. They’re also key to product innovation and a positive employee experience that satisfies and retains the workforce.
“Another encouraging development we are seeing, especially in younger markets such as EMEA, is businesses and even competitors collaborating to develop better products. This is truly pushing the boundaries of what’s possible and offering brand-new solutions that improve our lives and the way we do business daily. It is this kind of thinking and innovation which makes it a truly exciting time to be part of the SaaS industry and driving its future.”
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