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An Introduction to Software-as-a-Service
The main reason why SaaS is the future is that it’s a business model that determines the way applications will be delivered to customers. Cloud software and Software as a Service (SaaS) have near-zero marginal costs, which means that you can recover the costs of creating the software and selling it on a subscription basis. This blog will look at how the SaaS industry is redefining software solutions and how they can be used to help businesses incorporate technology into their processes.
What does Software as a Service stand for and what it is used for?
SaaS stands for Software as a Service; it is a business model that has changed the way we do business forever. Software as a service (SaaS) has revolutionized the way businesses can use the software. A cloud-based software SaaS product enables businesses to leverage software from anywhere at any time. SaaS also provides businesses with complete software solutions which they purchase on a pay-as-you-go basis from a cloud service provider.
SaaS is used for delivering computing services to businesses and companies on demand. Not only does SaaS improve efficiency and scalability, but also bring down software-associated costs and maintenance costs. The SaaS industry grew approximately from USD 6 billion in 2020 to a massive USD 272.4 billion in 2021. This huge compound annual growth rate of around 21% was due to the system rearrangements in companies due to the Covid-19 pandemic.
Moreover, as per “Software as a service (SaaS) Global Market Report 2021: COVID 19 Impact and Recovery to 2030″, the market will grow to USD 436.9 billion by 2025 at a compound annual growth rate of 12.5%.
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The Different Types of Software as a Service Applications
Based on the industry a SaaS product serves, various types of modern SaaS platforms are available. Also, the growth of SaaS solutions is set to sky-high as it captures various new spheres. Along with the growth of SaaS, the industry will witness the introduction of a new group of SaaS products because cloud-based software service is almost universally applicable to all the domains of human activity. Moreover, as the remote work culture deepens its roots further, software service companies are aiming higher than they have ever before.
What are Some Examples of Popular Software-as-a-Service Applications?
- Accounting Software Products
By automating the management of the company’s accounts and financial operations, accounting software solutions reduce costs and simplify complex financial operations. A few examples of SaaS companies in this segment are QuickBooks and Xero.
- Customer Relationship Management (CRM) Software
CRM is one of the most popular SaaS applications today. Customer data is crucial for promoting products, initiating new pitches, closing client deals, and R&D for new products. CRM software solutions enable effective management of customer data leading to better relationships. This is done by automating the general but repetitive sales tasks such as bulk mails.
- Enterprise Resource Planning (ERP) software
ERP software solutions are used to manage various business tasks including accounts, financial operations and analysis, risk management, budgeting, etc. An example of ERP software would be NetSuite that currently serves >20,000 enterprises.
- Project management software
Project management SaaS solutions enable the real-time synchronization of the Google sheets or spreadsheets making the coordination much easier and progression easy to track.
- Content Management Software Solutions
CMS aids in managing various forms of content by enabling publishing and editing of articles and blog posts. WordPress, the most famous website developing platform, is a brilliant example of CMS solutions
- E-commerce platforms
E-commerce SaaS tools are particularly helpful for new and small businesses allowing them to quickly list and sell their products without the need to build their own website.
Other popular SaaS applications encompass domains such as email marketing, billing, invoice generation, web hosting, and human resources software solutions. Examples of SaaS companies are Dropbox, Freshworks, Concur, etc. India harbours a list of top Software-as-a-Service startups and companies. Top SaaS companies in India are Cloudcherry, Zoho, Talview, WebEngage, VTION, Keka, Razorpay, Kayako, etc.
With all the SaaS technologies available, you can pick and choose which cloud products make the most sense for your business. Some popular modern Software-as-a-Service platforms include Concur, Slack, Microsoft Office 365, Salesforce.com and Dropbox, just to name a few.
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What Are the Benefits of the Software-as-a-Service Business Model?
Apart from reliability and scalability, there are the benefits of adopting the SaaS technologies:
Easy to Integrate: Modern SaaS platforms allow easier and quicker integration with other platforms without the need to acquire expensive hardware and infrastructure.
Cost Savings: It works on a subscription-based model while the remote cloud network is centrally located, rendering its affordability and flexibility. Moreover, SaaS eliminates the need to procure hardware making it a cost-saving option. As the vendor providing the service hosts and maintains the servers, cloud, and database, the businesses adopting SaaS don’t need to install SaaS applications in their systems.
Better Business-Client Relationships: Its cloud-based programs allow enterprises to run their businesses more efficiently by using a model that is based on retention rather than just initial sales. This makes them ideal for any business because it allows for a longer and more profitable relationship with clients.
Easy to Scale: When you use the software as a service, updating process and scalability to adapt as per the changing business scenario becomes easier. As businesses grow, the bandwidth and users require more employees. The scalability becomes an issue for small businesses when they host the software themselves. However, SaaS being scalable easily eliminates the chances of such pressure and enables easy business expansion.
As more and more businesses demand such subscription-based pricing structures, companies are working to provide their software solutions as a SaaS business model.
Is Software-as-a-Service the fastest growing industry?
It’s no secret that Software-as-a-Service is the biggest industry when it comes to applications and software. Not only that, but a further 86% of organizations said that they fully expect at least 80% of their software needs would be met by SaaS after 2022. Here are key data statistics that confirm the growth of the SaaS industry is impeccable:
- The present growth rate of the market is around 18%.
- Around 78% of small businesses and enterprises are already using Software-as-a-Service in one way or another
- Flexibility and extensibility are two of the main motivators for implementing Software-as-a-Service apps, according to 70% of CIOs.
How Software as a Service is Beneficial to Salesforce?
Customers can always opt not to extend their subscription if they are unhappy with the services; the discontinuance is easy because SaaS is a subscription-based service.
There is no need for substantial upfront investment in IT infrastructure as well as the day-to-day hassles of infrastructure maintenance making SaaS easy to adopt even by micro and small enterprises and SMBs.
What are the Benefits of Software as a Service for businesses?
- According to a McAfee study, 52% of companies received enhanced security by using the cloud for their systems. The success of the SaaS industry is stated in the fact that around 87% of user companies reported acceleration in their businesses after cloud adoption.
- It is based on cloud business model brings efficiency, easy installation, cost-savings, scalability, and reliability for businesses. However, enterprises need to undertake considerable advancements to incorporate the SaaS model. Here are the key benefits of SaaS for businesses
- Adoption of it needs minimal hardware setup and little to no infrastructure costs. This brings down the capital expenditure to almost zero, a win-win situation for MSMEs and SMBs.
- As Software-as-a-Service are accessible anytime and anywhere through a connected device, it simplifies remote working, boosts productivity and efficiency along with data saving on the system.
- Software-as-a-Service are made available on a per-seat and per-month basis. This brings flexibility for businesses to subscribe to services as per their requirements. Also, businesses can choose to expand the application whenever needed.
Software as a Service is the future of business software. It’s not a trend that can be overcome by new software releases. It’s a business model and the way applications will be delivered to customers.