SaaS has become rapidly popular in recent years, this technology has helped businesses accelerate their potential with more powerful tools. If you have not known about it yet, this is a perfect time to get an insight about this technology. As adoption of cloud computing increases, the Software-as-a-Service market also grows quickly, it is expected to reach $726.1 billion by 2027. Thus, the increasing demand for it is happening in businesses of all sizes. That’s why companies need to catch up with trends to take its advantage.
In this article, we will discuss the top 8 SaaS trends for 2023 and how businesses can capitalise on these trends to improve their efficiency, reduce costs, improve customer service, and increase productivity.
Table of contents
1. What is SaaS?
SaaS (standing for Software as a Service) ) is a software distribution model that offers cloud-based software for end-users from a cloud vendor via a smartphone or web interface. For instance, Dropbox, Canva, Slack and Google Docs are SaaS platforms.
SaaS applications are typically accessed by users of a web browser. People often consider it as a part of cloud computing, along with several other as a service business model.
With Software-as-a-Service, customers do not have to install and maintain the software on their own computers or servers. Instead, they access the software over the internet and pay a subscription fee to the service provider. It can be a cost-effective and scalable solution for businesses of all sizes. This way, companies also benefit from the recurring revenue.
1.2. Types of SaaS
Some popular types include:
- Customer relationship management (CRM) software. Example: Salesforce, HubSpot
- Enterprise resource planning (ERP) software. Example: SAP, Oracle
- Productivity suites. Example: Microsoft 365, Google Workspace
- Email and calendaring software. Example: Gmail, Google Calendar
- Collaboration Software. Example: Slack, Microsoft Teams
- Marketing automation Software: HubSpot, Microsoft Dynamics 365, Salesforce
- Business intelligence (BI) Software: Tableau, Power BI
1.3. Benefits of using SaaS
It offers a number of advantages over traditional on-premises software, including:
- Affordability: It is typically priced on a subscription basis, which can be more affordable than purchasing and maintaining on-premises software.
- Scalability: If our needs change, you can easily scale up or down the software. This can be especially beneficial for businesses that are growing rapidly.
- Accessibility: With an internet connection, you can access SaaS from everywhere. This makes them ideal for businesses with remote employees.
- Ease of use: It is easy to use and do not require extensive training to learn.
- Security: SaaS providers typically have robust security measures in place to protect their customers’ data.
2. Current State of the SaaS Industry
The Software-as-a-Service market size has been expanding since the first decade of the 21st century, and even going further due to the COVID-19 pandemic. Because of its benefits, many businesses are moving their entire operations to cloud solutions.
44% of companies say that they have increased their use of public cloud services due to the pandemic. Around 30.2% say they have increased spending on SaaS solutions. Another 85% report that they expect the changes to be permanent. It’s estimated that by 2025, 85% of business apps will be SaaS-based. Above mentioned figure indicates that the industry is experiencing an upward trend, and is also expected to increase sharply in the future. From McKinsey report, Marketing and Sales remain the highest expenses of Software-as-a-Service companies, amounting to 50% or more of their revenues
According to Statista, the SaaS market was believed to be worth approximately $167.34 billion in 2022 and is expected to reach close to $197.29 billion in 2023.
Also in 2022, the leader of this market is the United States, with the most Software-as-a-Service companies, at 16000, gaining a total revenue of $389.3 billion. Canada and the United Kingdom follow with 2000 companies. CMF also notes that the industry currently contributes 0.15% of the world economy and 2% of Fortune 500 companies’ total revenue.
There are a number of factors to explain its growth. Some of them are the increasing adoption of cloud computing, the growing demand for mobile applications, the rise of AI and machine learning, the need for businesses to be more agile and adaptable…
3. Top 8 SaaS Trends in 2023
3.1. Artificial Intelligence & Machine Learning
The rise of AI and ML can be seen in almost all industries, as they are ‘buzzwords’ in recent years. It’s no doubt that they are also becoming a major trend in the Software-as-a-Service industry for 2023. They have quickly become the backbone of many solutions by offering unique features and benefits to automate many tasks and improve user experience across different applications and platforms.
A 2022 survey by McKinsey found that 63% of respondents are already using AI in their businesses, and another 32% plan to do so in the next two years.
Some of the most-used cases of applying AI and ML are:
- AI-powered chatbots providing customer support 24/7
- Personalising the user experience, predicting customer churn, identifying upsell and cross-sell opportunities
- Developing more efficient algorithms
- Predictive analytics applications
- Automating tasks, optimising manufacturing processes
- Tracking the results of campaigns
- Optimising resource usage
- Notifying any potential security threats
As AI and ML technologies continue to develop, we can expect to see even more innovative and powerful applications.
3.2. Security & Compliance
An increasing focus on security and compliance will soon become a trend. This is due to a number of factors, including the growing number of data breaches and cyberattacks, the increasing complexity of applications and environments, the growing number of regulations that govern the use of applications…
For instance, a 2022 survey by Forrester found that 70% of businesses are now requiring their Software-as-a-Service vendors to comply with specific security and compliance standards. In 2023, Gartner also said that 85% of the vendors are planning to increase their investment in security.
In 2023, many technologies are used in security checks, such as multi-factor authentication (MFA), biometric, encryption, intrusion detection systems (IDS), security information and event management (SIEM) systems, cloud access security brokers (CASBs)… These technologies would help businesses reduce risk of data breaches and cyberattacks, store data securely, improve customer experience and reduce cost…
3.3. Micro SaaS
Micro SaaS is a type of Software-as-a-Service business that is typically small, more flexible and focused on a single niche or problem. It is typically run by a small team or even an individual. Micro SaaS products are often extensions or add-ons to larger products that aim to optimise the experience for industries.
It is a growing trend in the industry due to a number of factors, including the increasing availability of cloud computing platforms and tools, the growing demand for specialised SaaS applications and the relatively low cost of starting a micro business…
They are lower risk and relatively inexpensive to run, allowing businesses to access exactly what they need without spending a huge amount of money on complex software.
Some examples of micro businesses are: Airtable – a platform for creating customised databases and applications, Stripe – a payment processing platform, Zapier – an automation platform for connecting different apps and services together.
3.4. Subscription economy
The subscription economy is a business model in which customers pay a recurring fee to access a product or service. This model is becoming increasingly popular in the Software-as-a-Service industry, as it allows businesses to generate predictable revenue streams and build long-term relationships with their customers.
According to the Subscription Economy Index, the global subscription economy is expected to reach $1.5 trillion by 2025. The Software-as-a-Service industry is one of the key drivers of this growth, with subscription-based revenue expected to reach $278 billion by 2025.
There are a number of reasons why the subscription economy is becoming so popular in the industry. First, subscription-based SaaS applications are typically more affordable than traditional on-premises applications. This is because businesses can spread the cost of the application over time, rather than having to pay a large upfront fee. Second, they are typically easier to use and implement than traditional on-premises applications. Third, subscription-based applications are typically more scalable as businesses can easily add or remove users from their subscription plan.
There are many subscription-based SaaS apps that are available, some of them are Adobe Creative Cloud, Microsoft 365, Salesforce, Shopify, Slack.
3.5. Low-code/ No-code platform
A low-code/ no-code platform allows users to create and deploy applications without having to write code. These platforms typically use a visual interface, such as drag-and-drop tools, to allow users to build applications by connecting pre-built components.
Low-code/no-code platform is a major trend in the Software-as-a-Service industry as it helps businesses adopt SaaS applications, regardless of their coding skills.
According to Gartner, the low-code development market is expected to grow from $13.8 billion in 2021 to $26.9 billion in 2023. There are several factors that can explain this growth. They can be the increasing demand for custom software applications, the shortage of qualified software developers, the rising cost of software development and the growing popularity of the subscription economy.
Low-code/ no-code platforms offer a number of features that can help businesses to optimise their development process with reduced time, tailored solutions and minimal effort. On top of that, there is little / no need to spend hours to develop and test the code, and the enterprise can easily make changes to its applications without having to rewrite code.
As more businesses adopt cloud-based software solutions to manage their operations, seamless integration between these systems has become critical. According to a 2023 survey by Mulesoft, the average enterprise uses over 1,000 cloud applications. This proliferation of SaaS applications has created a need for businesses to integrate these systems so that they can work together seamlessly.
Businesses are increasingly looking to automate their processes to improve efficiency and reduce costs. Because of this, integration has become a trend as it can help businesses to automate their processes by connecting different applications and on-premises systems. For example, a retail company was able to increase its sales by 10% by integrating its CRM system with its E-commerce platform. The integration allowed the company to provide a more personalised customer experience and to recommend products to customers based on their purchasing history.
Overall, integration will help businesses keep updated with information and improve decision making.
3.7. Vertical SaaS
Vertical SaaS is designed for a specific Software-as-a-Service industry or sector. For example, some of the industries use this type of service are the healthcare industry, the financial services industry, or the retail industry.
Vertical SaaS applications are becoming increasingly popular because they offer a number of advantages over traditional horizontal SaaS applications. The first and most obvious reason is its industry-specific features. They are designed with the specific needs of a particular industry in mind. This means that they typically offer industry-specific features that are not available in horizontal SaaS applications. Furthermore, vertical SaaS applications are easier to integrate with other applications used in the same industry.
Some people may think that vertical SaaS is similar to micro SaaS as they all focus on a specific area. However, there is a key difference between these two. While micro apps are small and focus on a single niche or problem, vertical apps can be large and complex.
Some of notable examples of vertical SaaS include BioIQ (medicine), Guidewire (insurance), Innovacer (healthcare)
3.8. In-house SaaS APIs
In-house SaaS APIs are APIs that are developed and maintained by a company for its own internal use. These APIs can be used to connect different SaaS applications and on-premises systems, or to provide access to company data and services. By interacting with various SaaS solutions, businesses can create a robust ecosystem that meets their specific needs.
As owned by an entrepreneur or an individual, it can give its owner greater control over the development, maintenance and security. However, developing and maintaining in-house SaaS APIs can be a costly and time-consuming process. Companies need to have the necessary resources and expertise to develop and maintain these APIs.
4. How to Capitalise on the Top SaaS Trends of 2023?
Embrace vertical SaaS
Vertical SaaS applications offer a number of advantages over traditional horizontal ones. If you are not already using them, then consider adopting them to improve your efficiency, reduce costs, and improve customer service.
Micro SaaS can be a great way to solve specific problems
If you have a specific problem, then consider using a micro SaaS application. They are affordable, easy to use, and customizable.
Use AI and ML
AI and ML can be used to improve SaaS applications in a number of ways, such as by automating tasks, providing insights, and personalising the user experience. If you are not already using AI and ML in your applications, consider doing so.
Use low-code/no-code platforms to create and deploy SaaS applications.
Low-code/no-code platforms make it possible for anyone to create and deploy applications without having to write code. This is making Software-as-a-Service more accessible to businesses of all sizes. If you are not already using low-code/no-code platforms, consider doing so to create and deploy custom applications that meet the specific needs of your business.
Integrate your SaaS applications and on-premises systems
Integration is becoming increasingly important as businesses use more and more SaaS applications and on-premises systems. Make sure that your SaaS applications and on-premises systems are integrated so that you can work more efficiently and effectively.
In case you want to build a Software-as-a-Service product, then considering this blog: How Much Does It Cost To Build A SaaS Product In 2023: An Excellent Guide
To conclude, the future of Software-as-a-Service is very bright. The industry is constantly evolving, and new trends are emerging all the time. In this article, we have discussed the top 8 SaaS trends for 2023.
These trends are shaping the future of Software-as-a-Service. It also offer businesses a number of opportunities to improve their efficiency, reduce costs, and improve customer service. As a result, companies should adopt SaaS applications to benefit from their future growth of the market. They will not let you down with its well-tailored tools for your business.
If you do not know what SaaS is and are still searching for a reliable business companion, don’t hesitate to contact AgileTech. With our experienced team of developers, we will give you a detailed plan and estimation of any of your SaaS ideas that meet all your expectations. For further discussion and free consulting time, please contact us at [email protected] or fill in the registration form for a 30-minute meeting with our IT experts.