Dec 1, 2020
12 min readNowadays, different kinds of businesses are extensively moving to the cloud. O’Reilly reports that 88% of the respondent companies had used cloud services before lockdown and expect their further growth by Q2 2021. Therefore, SaaS application development looks also like a profitable venture today.
Yet, to stay afloat in the cloud arena, you need to arm your offering with precise technology and fresh tools. In other words, you need to keep your eye on the future of SaaS.
To help you deploy the promptest cloud solutions, in this post, I collected the top SaaS trends for 2021.
SaaS industry trends
SaaS trends among other cloud offerings
Casting an eye on projections for this field, you can see that the future of SaaS seems to be the brightest than ever. As the most mature model, SaaS has a significant lead in the cloud computing market. According to Gartner’s forecast, SaaS will reach $140 million by 2022, surpassing almost twice in revenue the nearest rivals – IaaS and PaaS.
Meanwhile, SaaS is predicted to slow its growth over 2019-2022. As such, it is going to be the third among other cloud services, having a 12% growth. Notably that IaaS and PaaS will top this list, increasing by 18% and 17% for this period.
Source: Gartner
Among other cloud services, SaaS is still the most employed cloud model. Statista forecasts this tendency will keep on going in the near future of SaaS. Thus, the expected number for installed SaaS workloads is 380 million by 2021. In contrast, IaaS and PaaS are predicted to gain resp. 76 and 48 million of installed workloads.
Furthermore, SaaS is expected to show rapid growth in its usage from 2015 to 2021. Thus, over this period, this cloud offering is forecasted to grow by 393%. In comparison, PaaS is going to reach a 380% growth while IaaS is about to have a 130% increase.
Source: Statista
SaaS trends during COVID-19 pandemic
The COVID-19 pandemic and global market uncertainty have also shaped the SaaS market trends. According to the SEG report, in March 2020 there was a fever pitch of stock selling for SaaS companies in response to the global situation.
To this end, the main market indices showed negative YTD returns. In particular, the SEG SaaS Index dropped to -25.7%, having exceeded the S&P 500 and Dow Jones indices through the sell-off.
Yet, the impact of lockdown events is not only disturbing but also transformational. Cloud providers from the communications & collaboration area mostly benefited from the work-from-home mandate.
Notably, Zoom headed this sector with a 92% YTD rate by SEG SaaS Index as of March.
Source: SEG
Today, the state of the cloud investing market seems to be returning to normal. As such, the SEG SaaS Index raised to nearly +40% YTD in August 2020 and keeps on growing. So, the business future of SaaS looks pretty well amid the global pandemic.
SaaS adoption trends
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 Blissfully report, in 2 years, the fastest growth in cloud apps usage showed:
- IT Security;
- Customer support;
- HR.
As such, these SaaS trends may result in scaling niche markets shaping great future opportunities for SaaS.
Some of the more mature areas, like sales and marketing, demonstrated the slowest growth in cloud app adoption.
Source: Blissfully
Also, Blissfully reports that larger companies tend to use more cloud apps in total. So, we have such a picture:
- 102 apps is an average number for a small firm;
- 185 apps – for a mid-market company;
- 288 apps – for a big enterprise.
Meanwhile, another item in the list of SaaS trends is that larger companies deploy fewer unique cloud apps per person.
Source: Blissfully
Source: Blissfully
Interestingly, a growing waste of duplicate and orphaned apps is also one of the latest trends in SaaS. Hence, the number of duplicate apps grew by 80% from 2018 to 2019 and equals 3.6 applications per company. A similar situation is with orphaned cloud app subscriptions. Thus, they were up almost 100% for all size firms, having reached 2.6 apps per company.
That entails wasted spendings and significant security risks for a company. To this end, the issue of app-to-person relationships is on the horizon in the near future of SaaS usage. Given the cost to build a SaaS app, duplicate and orphaned applications remain a significant financial aspect of the software-as-a-service market.
SaaS app development trends
Artificial intelligence
In recent years artificial intelligence is steadily integrating into different kinds of businesses. According to O’Reilly, 36% of respondent organizations have deployed AI services, and 47% expect to use them over the next three years.
This catch-all trend expanded to cloud solutions and is predicted to take root in the future of SaaS. Yet, machine learning and natural language processing are already key trends in SaaS technologies. AI-powered technologies use the ability of human speech patterns recognition. Due to that, AI enhances automation, security and speeds up data handling.
The most demanded industries to adopt AI methods are social media, education, travel, and healthcare. As a matter of fact, the healthcare cloud computing market, as one of the most prospective fields, is forecasted to reach $51.9 billion by 2024.
Thus, to stay more responsive and flexible among the others, be aware of AI, one of the high-level SaaS trends of 2021.
Vertical SaaS
Vertical cloud is another SaaS trend for 2021 and beyond. While horizontal SaaS uses a one-stop-shop approach, this model aims to meet the specific industry needs. That helps you get closer to your customers and offer them the best practices of the field.
Vertical cloud is also a pretty profitable venture. Actually, 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 and retail analytics, and health BI software are promising spheres to adopt vertical cloud for now.
A mobile-first mindset
By the year 2022, experts project that around 72.6% of the world’s population will browse the internet through their mobile devices. It is a rule of thumb to operate in your customer environment. So, a mobile-first mindset is one of the most influential SaaS trends you should follow in the development of SaaS apps.
Now, entrepreneurs increasingly use smartphones to manage their businesses from anywhere. Employees, in turn, also become more mobile. Thus, cloud apps aimed at enhancing operations need to have rich functions for mobile-first users. As such, communications, project & task management are key fields to adopt this SaaS technology trend.
Therefore, we see this tendency will significantly shape the future of SaaS in 2021 and beyond. So, fast mobile apps and mobile-responsive sites are a must-have to stay competitive nowadays.
Micro-SaaS
The increase of micro-SaaS solutions is another example of SaaS trends targeted to meet customer needs better. They include add-ons, accessories, and extensions designed to complement other SaaS tools’ functionality.
Micro-SaaS projects usually require small teams and little cost. Also, this model lets you have high margins alongside low risk and location-independency. Thus, micro-SaaS enables you to use all the cloud benefits, serving clients in your small market.
However, micro-SaaS is expected to thrive just in particular areas. They are, for instance, personnel administration, applications for email management, content management collaboration. So, this SaaS future trend can be a gold mine for the niche SaaS business in 2021 and further.
Shifting to PaaS
For now, PaaS is becoming more popular, keeping up with SaaS offerings. Statista reports this cloud model is growing faster than SaaS when it comes to its use. In fact, during 2020-2021 the expected number of installed PaaS workloads is going to rise by 85% compared to a 21% growth for SaaS. As this happens, many companies opt to shift to PaaS, advancing their products today.
So, what are the main reasons for this SaaS software trend? Actually, PaaS is an excellent choice for businesses to create their own custom apps. It enables developers to build software faster, easier, and cost-effectively. Also, PaaS has rich options for customization to make your venture agile for scaling.
With all this, solid data protection remains a top advantage of PaaS. At the same time, for 67% of customers, cybersecurity is the biggest concern for SaaS model adoption. That is why shifting to PaaS can be game-changing in the near future of SaaS.
White-labeling
White-labeling is another example of fast-growing SaaS trends for 2021. It enables startups and small businesses to quickly enter the market, avoiding the hassle with the development of SaaS apps. So, what is white-labeling in the cloud industry?
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 the white-labeled cloud apps is that they are fully customizable to look yours.
Source: Email Vendor Selection
In such a way, companies with different expertise can deliver the features needed right for the customer. Besides, this model lets your business scale with little to no overhead costs. As such, you can get higher revenue per each client using it.
By the way, social media, email marketing, mobile applications, SEO, and SEM management are thriving fields to use this trend in the future of SaaS.
Shaping the future of SaaS: Summary
Today, the industry of SaaS application development promises excellent business opportunities for entrepreneurs. However, technologies and customer demands are continuously moving on. To win this digital battle, you should know about things happening in this field.
Given the recent trends, we see the future of SaaS in expanding small niche markets being caused by Micro-SaaS and Vertical SaaS trends. Also, AI, shifting to PaaS, and white-labeling trends lead to more complex and personalized cloud offerings coming into play. Finally, a mobile-first mindset is a given while building cloud apps in 2021 and beyond.
I hope our list of the latest trends in SaaS will help you stick out the crowd and gain an advantage over your rivals. Codica expert team is always ready to provide a consultation or help you with SaaS development. Do not hesitate to contact us if you need assistance!