Blissfully’s 2020 SaaS Trends Report, Part 3— Takeaways for SaaS Builders, Investors, and Customers
📖 Introduction: About this Report
At Blissfully, we’re focused on the ways companies use software-as-a-service (SaaS) to power business productivity, growth, and success. Each year, we release Blissfully SaaS Trends Reports based on proprietary data from thousands of companies around the world.Small Business, Mid-Market, and Enterprise.
See Part 1 and Part 2 of this report for more.
🔑 Key Takeaways for SaaS Ecosystem Stakeholders
SaaS Builders: The market is growing, but also maturing and competitive
We’re still in the early innings of the SaaS market. We conducted a survey of IT leaders which 25% said they were SaaS only. This number is projected to continue to rise, likely approaching the vast majority of companies in the next five to 10 years.
That said, certain categories are maturing, with deep market penetration. These tend to include the early categories, like public cloud providers and CRM and are shown in the different growth rates by categories in the data above.
In an increasingly crowded space, delivering value to consumers and positively differentiating your brand matters a lot more. Luckily, companies are still very willing to try new apps, especially when offered free versions. Our data shows that companies use 3x more free than paid apps, so if your product benefits from lightweight adoption and you can land and expand, think of a free tier like those offered by Zoom or Slack. It’s important to think through what exactly should be offered for free and when paid tier options should begin. Product usage data and customer stories are valuable in helping you understand what parts of your product are getting your customers in and what parts are keeping them there. Knowing this can be good heuristics for which parts to leave free and which to charge for.
Finally, even though there are tons of apps, there’s still opportunity, especially in areas that have been slower to move into SaaS, like IT, Security, Compliance, and HR. These categories are seeing significant growth opportunities and will likely continue to see new entrants to take advantage of this opportunity.
Investors: Companies still need capital to get to scale
On the bright side, about half of the top 100 SaaS apps are privately funded. On the other hand, those companies have raised on average over $100M dollars. We all have seen that even though it’s easier and cheaper than ever to get a company off the ground, it still takes significant capital to build a significant, established business. And therein lies the opportunity. As new companies push to be category leaders, they will need private funding to make the transition.
Additionally, we’re seeing opportunities for high growth in more niche markets and categories as products get increasingly specialized. There’s really no limit to the amount of niche markets that can be disrupted by software, and we expect to see a lot more of this in the near future.
Encouragingly, the other half of the top 100 SaaS apps are public companies, deriving significant value from SaaS growth rates. These public companies will likely continue to make acquisitions to strengthen their offerings and add additional revenue streams.
In addition, we’ve noticed a great amount of new international investment opportunities driven by two key data points. First, SaaS is even more concentrated in the US than the broader tech ecosystem, across both public and private companies. This, coupled with increasingly-regionalized privacy and compliance requirements might create the opportunity for more localized SaaS vendors.
SaaS Consumers: SaaS Management Still Lags-and Matters More than Ever
SaaS solutions continue to arrive to answer the problems and questions that plague businesses of all sizes. There’s no sign that software is going to slow down anytime soon. The only question is how businesses will take advantage of this-or fall victim to it.
SaaS waste continues to grow as companies forget to cancel subscriptions or create multiple subscriptions for the same app or category. We’re seeing an average of 10 orphaned or duplicate apps at a mid-market business. This comes out to about 5.4% of apps that are not being used to their full extent, amounting to an average of $135,000 in wasted spend annually.
The other significant challenge to managing a large number of SaaS apps is the governance and compliance aspect. Our previous research shows that only 18% of the top 1000 SaaS apps are SOC 2 compliant. Plus we have different regional privacy regulations like GDPR and CCPA putting requirements on how companies manage sensitive data.
And finally, we see that employees across every department are using more than 10 apps to get their job done. This means the coordination challenge of managing people, apps, and the relationship between them (what we call the SaaS Graph) gets exponentially more complex as companies grow and use more SaaS.
Gaining the benefits of SaaS without the drawbacks-such as wasted spend and security risks-means putting a real SaaS management strategy in place. A management strategy can help ensure that SaaS is used responsibly, securely, and cost-effectively across the business, no matter how you grow. Blissfully can help.
About Blissfully
SaaS is taking over the business world, empowering teams to drive productivity using apps they love. In fact, Cisco estimates that 75% of workloads will be SaaS-only by 2021.
This rise of SaaS has distributed IT management across the entire organization, creating an overall lack of visibility. While extensive tool sets exist to manage the traditional IT stack-such as networking, infrastructure, and hardware — there hasn’t been an equivalent for the IT business operations (SaaS) stack.
Enter Blissfully. We were started to help companies continue to securely leverage SaaS tools for increased business productivity. Our goal is to be a real-time source of truth, giving teams visibility into their entire app ecosystem. We aim to simplify and humanize IT operations so companies can focus on what they do best.
Blissfully gives you automated visibility into your SaaS apps, usage, and spend, along with powerful workflows to manage change.
Originally published at https://www.blissfully.com.
