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Nowadays, different kinds of businesses are extensively moving to the cloud. Various reports and studies show that over 80% of businesses use cloud services and SaaS solutions. Needless to mention how profitable investment in SaaS is, right?

Yet, to stay afloat in the information technologies arena, you need to arm your offering with precise technology and fresh tools. In other words, it would be challenging to build a SaaS product without exploring development trends and the market overall.

The year 2023 has brought significant changes in the global markets. The shifts also influence the cloud industry. So, below, we consider how the cloud market changed in 2023 and what defines its trends for 2024.

SaaS trends among other cloud offerings

The popularity of cloud computing exploded in 2020-2021. Why did it happen? Organizations adopted remote work due to the pandemic and focused on delivering digital services. Undoubtedly, the growth of cloud computing will continue in 2024 as these technologies are firmly incorporated into our lives.

The future of SaaS depends on the challenging factors that influence economies in general. Inflation due to geopolitical unrest affected the SaaS market as well. Nevertheless, it holds the trends that will help businesses evolve. Companies just reset their priorities to adjust to the changed world situation. As a result, the SaaS industry thrives today, boasting a market size that’s expected to reach $232.3 billion in 2024.

Chart showing SaaS market size

Currently, the increasing number of SaaS makes it the largest cloud service in terms of spending. According to Gartner’s forecast, cloud end-user spending reached $599.84 billion in 2023.

Worldwide public cloud services end-user spending forecast

However, it is projected that IaaS will be the fastest-growing market, with a compound annual growth rate (CAGR) of 20% over the following years.

Priorities for SaaS companies in 2024

Despite the declining trends, there is space for an optimistic view. After a crisis, there is a rise. So, 2022 also brought good news for SaaS, showing decent development in 2023 and an even brighter future in 2024.

According to Paddle, SaaS companies are still focused on revenue metrics and increasing customer engagement. Thus, there are three main trends that form the near future of SaaS. They are:

  • Operational efficiency;
  • High-quality products;
  • Delighted customers.

So, how exactly do SaaS companies plan to survive in the challenging climate?

SaaS companies plan to achieve operational efficiency by relying on key metrics. They are customer acquisition costs and net revenue retention. Also, SaaS companies greatly focus on unit economics and reducing license counts. Moreover, SaaS companies will optimize marketing spending and boost growth rates.

Customer acquisition and retention are also priorities for 2024. Successful companies will aim to reduce the churn rate and raise chances of gaining more profit. SaaS companies will achieve these goals by enhancing the customer experience.

SaaS companies improve their solutions to achieve the above goals and increase customer retention rates. Enhancements include simple signups, the absence of hidden costs, and helpful demos and onboarding.

You may also like: Ultimate Guide About Cloud App Development: Features, Cost, Timeline

For now, cloud apps widely help employees to do their job faster and advance their performance. As a result, people from various divisions deploy SaaS applications in their work. Yet, some business units are adopting cloud products faster than others.

According to Flexera report, during 2023, the fastest growth in cloud apps usage showed:

  • AWS;
  • Microsoft Azure;
  • Google Cloud.

As such, these SaaS trends may result in scaling public cloud adoption, shaping the future opportunities for SaaS.

Public cloud provider adoption rates for organizations in 2023

Also, Flexera reports that respondents tend to locate cloud apps in multi-cloud:

  • 87% have a multi-cloud strategy;
  • 11% have a single public approach;
  • 2% use a single private cloud.
Chart showing the state of multi-cloud usage

The adoption of the public cloud continues. Currently, 50% of workloads run in a public cloud, and that ratio is expected to grow by 6-7%. The main result here is that respondents are prone to move sensitive data to the public cloud. The issues that impede moving data to the public cloud are app dependencies, technical feasibility, and costs.

The main trends in adopting cloud services also imply a focus on optimizing the usage of existing cloud solutions or migrating to the cloud. The third decides to move from the on-premises solutions to SaaS.

Read also: 26 SaaS Application Ideas for a Profitable Product in 2024

SaaS app development trends

Nowadays, after the wild growth back in 2020, the SaaS industry has become stable, introducing new trends every year. Therefore, here are several trends worth looking into.

Multi-cloud strategy

In 2022, software as a service companies chose to spread their services across various providers. This approach is known as the multi-cloud strategy, and it has been steadily growing through 2023. It offers many pros, including flexibility and security in running business operations.

Also, the multi-cloud approach helps prevent attachment to one specific ecosystem. Thus, you can avoid situations where cloud service providers change the apps or terminate the app support. Multi-cloud helps create backups. Multi-cloud also decreases system errors or downtime, preventing breaks in business operations.

Accordingly, 90% of mid to large enterprises use a multi-cloud solution. Small companies, on the other hand, rarely adopt multi-cloud solutions due to tight budgets.

If you switch to multi-cloud services, your business no longer depends on one cloud provider. This provides the following advantages:

  • Avoiding vendor lock-in and greater flexibility in changing providers if needed;
  • Cloud service cost optimization and switching to a different provider if costs are too high;
  • Security and ability to move workloads to a public cloud or IaaS platforms in case of DDoS attacks;
  • Flexibility in geographies and ability to move data to local providers or data centers.

Regarding the advantages of multi-cloud, it will likely be one of the SaaS trends in 2024.

Related reading: 22 Successful SaaS Startups for Your Inspiration in 2024

Artificial intelligence

In recent years, artificial intelligence (AI) has steadily integrated into various businesses. Today, it is trendy, with different AI-powered solutions popping up regularly.

This catch-all trend has expanded to cloud solutions and has taken root in SaaS. Yet, machine learning and natural language processing are already key trends in SaaS technologies. Various SaaS products use AI-powered technologies for different purposes, as they allow the generation of speech, text, and images and can be implemented to perform dozens of different tasks.

For example, AWS AI Services is a key player in this area. AWS offers machine learning for data scientists and developers and suggests machine learning (ML) tools for business predictions. The services include a use case for massive healthcare data and industrial equipment control.

Another excellent use of AI is Salesforce. This SaaS software tracks customer behavior, helping businesses improve their services. Based on the collected data, the app offers needed adjustments.

Salesforce as a platform using AI

Low code/no code cloud services

According to the survey, the low-code market will reach $94.75 billion by 2028 at a compound annual growth rate (CAGR) of 31.6%. Low-code and no-code tools help quickly build and deploy projects that do not require complex architecture. They are mostly used in web development and design. You can even build AI/ML-powered apps with low-code/no-code tools.

Most low-code/no-code services are cloud-based, which means that you do not need to operate infrastructure for such tools. Examples of low-code platforms are Microsoft Power Apps, Mendix, Figma, Airtable, and Zoho Creator. These help create business apps, designs, and spreadsheets.

Such services can be used for creating simple business solutions. Therefore, this SaaS technology trend will likely evolve in 2024. Still, if you have a complex project or need a solution tailored to your business needs, it is advisable to opt for custom software development.

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Vertical SaaS

Vertical cloud is another SaaS trend in 2023 that moves to 2024. While horizontal SaaS uses a one-stop-shop approach, the vertical SaaS model aims to meet specific industry needs. That helps you get closer to your customers and offer them the best practices in the field.

Vertical SaaS is also a pretty profitable venture. Some researches indicate that it 8x reduces customer acquisition costs compared to horizontal cloud platforms. Likewise, vertical SaaS helps you evade the cutthroat competition of the cloud space. With your unique service, you can carve out your own niche and deliver greater business value.

This tendency is expected to be one of the leading SaaS future trends. Notably, logistics, retail, analytics, and health BI software are promising spheres for adopting vertical cloud for now.

Speaking of vertical SaaS, our team has just the right case to share. Recently, we developed a custom SaaS platform for the bakery. It is a vertical SaaS that connects cake makers and customers, aiming to facilitate their operations in Australia. The solution includes a convenient quote system and a simple messaging feature. Through them, customers can indicate what cake they want, on which occasion, and other parameters.

We also included a calendar for bakers and customers, allowing scheduling orders. Integration with Google Maps API and Google Places API allows for a quick search for bakery locations.

Below is the video to help you grasp the idea of this SaaS feel and flow.

You may also like: Top SaaS Pricing Models: Pros and Cons of Each Example

Micro-SaaS

The increase in micro-SaaS products is another example of SaaS trends that are targeted to meet customer needs better. They include add-ons, accessories, and extensions designed to complement the functionality of other SaaS tools.

Micro-SaaS projects usually require small teams and little cost. Also, this model lets you have high margins alongside low risk and location independence. Thus, micro-SaaS enables you to use all the cloud benefits to serve clients in your small market.

For example, the FindMyShift micro-SaaS company helps to allocate and manage labor resources.

FindMyShift micro-SaaS

Recommended reading: IaaS vs PaaS vs SaaS: Choosing the Best Cloud Computing Model

Customer experience focus

SaaS industry overview shows that many SaaS platforms suffer from a lack of customer service. Thus, it is an important issue to solve and in 2024, market offers lots of ways to do so.

Unsurprisingly, customers prefer solutions that aren’t too complex and meet their specific needs. Consequently, SaaS providers offer more options to potential customers — improved personalization, white labeling, more ability to customize, APIs, etc.

Furthermore, SaaS providers are increasingly focused on simplifying their services to retain customers. The ease of use is a big advantage, especially for small businesses.

At Codica, we have been delivering SaaS products since 2015 with customer experience as one of our priorities. For example, we successfully created real estate SaaS connecting homeowners, agents, and tenants.

A remarkable feature of this platform is 3D tours. They help users view real estate property in detail by scrolling through the imagery. These functions save users time and cost for visiting each property.

This is one of the examples of the projects our experts delivered. Feel free to learn more in our portfolio.

Recommended article: SaaS Marketing Strategy: How to Promote a SaaS Startup

Blockchain

The use of blockchain technology is a novelty in the software-as-a-service market. Certainly, SaaS platforms have to provide transparency and security for users. Nevertheless, SaaS solutions work on centralized databases, which are vulnerable to cyberattacks.

Meanwhile, blockchain technology is a distributed system that regularly verifies new data records. Furthermore, when new records are added, the technology copies the entire blockchain. Hence, blockchain can eliminate the data insecurity problem and be the main of the future technologies in SaaS.

Enhanced security

Undoubtedly, high data protection is the future of the SaaS industry. It is an important issue. The speed and depth of digital transformation not only provide business benefits but also create cyber risks.

For example, according to Gartner's analysis, spending on security risk management has grown 11.3% in 2023, hitting more than $188.3 billion. One of the factors in security spending growth is shifting to cloud solutions and multi-cloud services. SaaS businesses’ top priority is protecting themselves and their customers from data leaks, breaches and other issues. Therefore, developers raise the bar of their products' security, making cybersecurity and QA industry more expensive.

Obviously, security and compliance risks are the main barriers to realizing the benefits of the cloud. Definitely, security is a deciding factor in choosing a cloud partner. Hence, it is essential not to render your business vulnerable to cybercriminals and improve data protection.

Read also: SaaS Security Guide: How to Protect Your Product and User Data

Unbundling

Many SaaS companies bundle their software together within their pricing strategy. This leads to giving an enhanced user experience, but at a higher cost, too. As businesses realize this problem, they split their software in separate packages. By unbundling SaaS solutions, SaaS vendors can offer more flexible pricing for customers. This mitigates vendor lock-in problems for customers.

Moreover, the SaaS industry overview shows that unbundled SaaS solutions suit customers' specific needs. Therefore, such apps are preferable.

Unbundling has become popular and one of the top SaaS trends. Thanks to this approach, SaaS vendors can provide more personalized solutions for customers.

Example of unbundling as one of the future technologies Saas

Source: FourWeekMBA

An example of unbundling in SaaS is the products that appeared based on Excel. For instance, Salesforce appeared as an advanced version of CRM spreadsheets in Excel. Trello, Jira, and Asana are enhanced project management tools that replaced similar features in Excel.

White labeling

Being another trendy thing is SaaS industry, white labeling is definitely worth looking into. It enables startups and small businesses to quickly enter the market, avoiding the hassle of the development of SaaS apps.

So, how does white labeling work, especially in the SaaS market?

In a nutshell, a supplier sells unbranded cloud solutions to agencies to put their branding and resell them at a profit. The key feature of white-label SaaS solutions is that they are fully customizable to make it look like it’s yours.

Principle behind white-labeling in SaaS

In such a way, companies with different expertise can deliver the desired features for the customer. Besides, this model lets your business scale with little to no overhead costs. As such, you can get higher revenue per client using it.

You may also like: Why SaaS Startups Fail: Most Common Reasons and How to Prevent Them

Usage-based pricing

Traditionally, SaaS providers use a subscription model, which means paying a regular fee monthly or annually. However, a new trend shaping the SaaS pricing model is based on the services customers use. Thus, usage-based or consumption-based pricing means paying for the services that users apply.

So, what are the main reasons for this SaaS software trend? Due to global macroeconomic challenges, companies conserve and optimize their capital. A company can count on customer loyalty by offering pricing flexibility with the usage-based model. Thus, SaaS companies with the usage-based model will likely survive in the changing economic climate. That is why shifting to the usage-based model can be game-changing in the near future.

SaaS companies move to the usage-based model only or combine it with flat fees. For example, the Zocdoc healthcare app applies only the usage-based model. Meanwhile, the Mailgun e-mail delivery service and WordStream marketing platform combine a usage-based approach with fixed fees.

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Shaping the future of SaaS: Summary

Today, the SaaS industry is going through changes just like any other domain. Fortunately, changes promise new business opportunities. Technologies and customer demands are continuously moving on. Thus, to win this digital battle, keeping an eye on the market is a must.

We hope our list of the latest trends in the SaaS industry will help you stick out from the crowd and gain an advantage over your rivals. The Codica’s expert SaaS development services are always ready to provide a consultation or help you with SaaS creation. Do not hesitate to contact us if you need assistance!

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Dmytro is a software entrepreneur with 20+ years of experience focused on the Lean Startup approach. He loves helping startups build excellent custom products.
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