The first SaaS was launched in 1999 by Salesforce created a CRM platform. This marked the inception of SaaS and, ever since then, the industry has witnessed immense growth and it is promising still. Now, it is impossible to avoid ‌it in any vertical and business. It takes away the problem of buying and installing software with a subscription model that runs on the internet. SaaS has come a long way from what it was and it still has a long way to go. To truly understand why SaaS is so well developed, you would have to understand a bit of its past, its predecessor (ASP), and the factors that make up its success.Â
How old is SaaS?
In actuality, it dates back to the inception of dot-com, way back in the late 1990s. SaaS in that era began as software on floppy disks. It started with computers designed exclusively for businesses. Computers, back then, were very expensive and not a variable option for most companies and people. Back then, employees had to connect with the main server onsite to access data and use the software. Now, employees can easily access all company data remotely with a high level of security. In reality, the history of SaaS has only spanned over a few decades. While it has a very short history, there are so many developments that occurred.
How did it revolutionize business?
Back in the day, these services were in ASP (Application Service Providers) systems. And while it might not have been a great success, it served as a framework for SaaS to grow to what it is today. ASP was used to host and manage 3rd party vendors. Whereas, SaaS vendors code and manage their software. Moreover, ASP was limited in the sense that you had to access the client-server through installed applications. Now, SaaS uses the internet to provide remote access through mobile apps and websites. Additionally, with it, a business doesn't have to rely on in-house cables and LANs. ASP was not scalable, their software had a complexity that the hardware could not handle as the business data grew. In other words, SaaS made good on the limitations of ASP.
With the rise of SaaS business and systems, the world moved to a subscription-based servicing model. This brought a great impact on the world through cloud computing services. Now, most businesses and households run on some form of cloud computing and SaaS products. SaaS helped bring about a revolution in services by reimagining the way these services were provided to consumers. SaaS brought several tasks onto the same platform and gave consumers a way to integrate various software to optimize their business and processes. Now, businesses can integrate their marketing SaaS with EPMs and CRMs easily and quickly. Read More: 10 SaaS Growth Strategies to Try in 2022
Why is SaaS Growing?
As aforementioned, SaaS makes the usage of software easier with the removal of installation and buying of packages. With it, you can rent out the software and its capabilities for as long as you need. Introducing subscription fees made SaaS affordable and accessible. Moreover, it eliminated the need for equipment and servers. Additionally, with it, you do not need to train staff to run and use the technology.
Since there is a big market for such services, cloud computing, and SaaS, the industry has had substantial growth in the past decade. And it will continue to grow over the next few years. The reason ‌it is so popular is that it helps companies access the software on-demand without worrying about scaling. Additionally, companies like Adobe and Microsoft (traditionally sold licenses) shifted to the subscription model as evidence of how successful such models are. There are many factors that directly or indirectly helped SaaS grow. Read More: 20+ SaaS Marketing Tools that Every Company Needs
What are the factors lead contributing to the growth of SaaS?
There are a lot of benefits to using SaaS, and a few limits. However, the good by far outweighs the bad. With the plethora of options in every vertical of an industry, there has been an immense stride taken in terms of features and quality. Here are a few, among many, factors that affected and aided in the rise of SaaS.
1. Cost
This is one of the big reasons for the sustained growth of SaaS over the years. Before it, companies would have to invest a large sum of capital up-front to start a project. And most times, it would take years to see a profit made from the capital invested (CAPEX). However, with it, companies need to only invest in operating costs (OPEX). This lowers the risk of the project, and the capital needed a great deal. Additionally, there is no need to invest in equipment and space for said equipment and servers. It eliminates or considerably reduces, the need for traditional training for employees. Read More: 5 SaaS Pricing Models for a Balanced Revenue
2. Niche and generalized solutions and products
With the investments and boarding of SaaS, there have been great developments in both vertical and horizontal SaaS structures. And this is important for many reasons. Primary because it opens up a lot of opportunities for many companies that are looking for solutions that can scale up at affordable prices. It allows for more room to build and test more products, indirectly driving competition for better features and quality. Moreover, SaaS platforms make it easier to integrate with other software such as CRM and ERP. This means that companies can focus on growing while their software needs are being met.
3. Integrations
There are many advantages of integrations that make them so appealing to enterprises. When companies use applications that are made for their industry, they generate a lot of data. Companies record and secure this vast consumer data to use in the future. While you can easily store this data, regulation of the same becomes more complex as the volume increases. And without integrations, organizations have to duplicate data across platforms and departments. With integrations, you can use the same set of data across departments. Moreover, it helps cut costs by creating a central data architecture. Which then decreases delay in data management and communications. Companies can speed up processes and increase efficiency by eliminating human error.
4. Scalability
If organizations were dealing with the scalability of their software platforms with their business, there would be no room for improvement or expansion. Additionally, it becomes harder to scale down the software when required. The resources they allot to their software's scalability are opportunity costs. They can better invest their resources and capital into expanding their business. And this is what SaaS offers enterprises. They take the brunt of handling and maintenance of the software. Moreover, the companies don't have to worry about updating the software or the features. Thus, making it easier for enterprises to select software packages that give them the best results. Read More: B2B vs B2C SaaS Marketing: Understanding key differences