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SaaS apps have become the norm for most modern businesses, including small and medium sized businesses. A large number of these businesses have either already made the switch to SaaS apps or are in the process, but all of them are benefiting from today’s cloud technologies in one way or another. The main reasons behind the popularity of SaaS apps include low upfront costs, elimination of time-consuming process of installations and a lot less manual work, minimizing chances of human error.
According to a report published on Statista[i], the SaaS market size doubled to $157 billion in 2020 compared to that of 2014. This exponential growth can be attributed to different factors, including innovation in hardware and software, increased demand, decreasing costs and better internet accessibility.
The COVID-19 pandemic has accelerated the pace of adoption of cloud technologies and proved to be an unexpected opportunity. Post-pandemic spending is expected to increase as businesses try to find new ways to optimize IT costs, preserve their cash flows, ensure resiliency and prepare a remote workforce.
Before moving on to some of the most popular types of SaaS solutions that dominate the market, it’s important to understand the difference between the two basic models of SaaS i.e. horizontal SaaS and vertical SaaS. Understanding the difference between the two can help businesses optimize their IT spending and improve efficiency.
Horizontal SaaS refers to solutions targeted at a wider target audience from different industries. Since horizontal SaaS caters to a variety of business users, these solutions are more popular and have a larger market share than vertical SaaS. Horizontal SaaS solutions such as QuickBooks, Salesforce and Office 365 are more focused on business requirements in general rather than individual business needs.
Horizontal SaaS solutions allow vendors to reach multiple industries and niches. Instead of focusing on a specific niche, providers of horizontal SaaS solutions are focused on the masses across multiple niches with varying needs. As a result, customer acquisition costs are higher because the vendor has to run multiple marketing and sales campaigns when targeting different industries.
Vertical SaaS solution providers are focused on industry-specific standards or niches. Although not as mature as horizontal SaaS, vertical SaaS has been gaining traction and experts see a lot of potential in this sector in the future because of it being a fairly recent phenomenon. Vertical SaaS solutions cater to specific needs of specific niches and don’t try to be everything to everyone.
As a result, the size of its potential market is also narrow which is why these solutions are usually developed by teams that have expertise in a specific niche. Vertical SaaS solution providers have to spend less to market their products as they only have to reach a narrow target audience i.e. a single niche. Some examples of vertical SaaS solutions include Veeva (pharmacy), Fleetmatics (inland logistics, vehicle allocation and Guidewire (insurance).
The cost of customer acquisition is lower for vertical SaaS because of lesser reach. Vertical SaaS vendors also have an advantage of reduced level of operations, higher manageability and can function efficiently even with a small in-house or outsourced team.
On Top SaaS
On Top SaaS is a newer SaaS concept that refers to industry-neutral and/or targeted software designed to seamlessly integrate with existing solution(s). The main strength of On Top SaaS solutions is that vendors don’t have to build everything from scratch and can take advantage of existing SaaS technologies and platforms. On Top SaaS offers more opportunities for vertical SaaS providers and promotes co-marketing initiatives.
For example, Zapier, which is a horizontal SaaS solution, was made to connect to hundreds of apps that ‘fit on top’. Zapier is also positioned to be a vertically aligned solution e.g. Zapier specifically designed for the finance or manufacturing industry.
Veeva is another example of an on-top SaaS solution that is a vertical SaaS solution structured on top of the Salesforce platform. This allowed the developers to leverage the power of an established platform and avoid developing everything from scratch.
B2B SaaS solutions are made keeping specific requirements in mind and are targeted at businesses. Providers offer their apps/software, APIs and extensions as a service to other businesses, while some businesses buy these solutions and then rebrand/resell them to the end users. Many B2B companies are also B2C providers that offer their solutions to both business and individual customers.
B2C SaaS companies refer to providers that offer solutions tailored to the requirements of the general public, allowing them to efficiently carry out business functions. For example, Office 365 is a B2C product for everyone and has become a household name.
SaaS apps are everywhere, whether we realize it or not, but here the focus is on some of the key areas where SaaS is making a noticeable impact. The list of all types of SaaS solutions is too long to be fully covered here because SaaS software can now be applied to almost any business process and human activity.
Customer information is one of the most valuable assets for any business. However, efficiently storing, accessing and gaining valuable insights from the customer data requires a modern solution. CRMs have become an integral part of businesses that want organization and structure and keep everything related to their customers in one place.
In addition to storing and accessing customer information from anywhere, anytime, SaaS CRMs enable businesses to target audiences effectively, create automatic alerts based on different parameters and maintain healthy customer relationships. A CRM system is a multi-departmental software that provides all customer-facing departments with access to the right data.
Key benefits of CRMs include trustworthy reporting, simplified collaboration, better efficiency, instant messaging, automation, visual dashboards and proactive services. A CRM is designed to keep all the important information at one place, including customer data, key metrics, notes, documents, contact information and other records.
Some examples of popular CRMs include Salesforce, Microsoft Dynamics 365, HubSpot CRM, Zoho CRM, SAP Service Cloud, Zendesk Sell, PipeDrive, Nimble, SugarCRM and Insightly. Many of these CRMs are specifically targeted at SMBs such as Zoho CRM and HubSpot, leveling the playing field and allowing them to stay competitive. Depending on the solution, key functionalities of CRMs include:
- Contact Management
- Customer Opportunity Management
- Lead management
- Sales analytics
- Sales force automation
- Sales forecasting
- Email marketing
- Workflow and approvals
- Document storage and sharing
- Sales performance management
- Chat and call center integration
- Marketing automation integration
- Web analytics integration
- Support automation
- Personalized quotes
- Social media management integration
- Case management
- Customer service automation
- Quote and order management
- Customer segmentation
Today’s financial institutions rely on heaps of information to make strategic decisions. Invoicing, payments, billing frequency and collection vary from one season to another. SaaS finance, accounting and billing solutions provide accuracy and clarity in financial transactions, while also offering the flexibility and scalability financial institutions need in today’s ever-changing markets.
On-premises financial software have limited capability when it comes to flexibility, scalability and personalized experiences, but AI-powered, cloud-based systems help businesses extract useful information from piles of financial information. Use of SaaS financial solutions means software is an operating expense instead of capital expense, including large upfront fees involved in buying, setting up and maintaining on-premises software.
The financial industry works on a day-to-day basis, so they constantly need to scale up or down according to business conditions. On-premises software offers limited scalability, making SaaS solutions a better choice for the financial industry.
Most SMBs have financial constraints and cannot afford to invest heavily in the infrastructure, software and maintenance. SaaS financial solutions such as QuickBooks Online, FreshBooks, Wave and Xero are tailored for SMBs, allowing them to effectively keep track of their accounts, finance and billing.
The HR department has to deal with a lot of tasks, especially when a large number of employees are involved. From managing payroll to time tracking, compliance, attendance and performance management, SaaS HR solutions help businesses increase efficiency, reduce labor costs and stay compliant. The HR people need specialized tools that can help them deal with complex HR tasks and make the work environment more productive.
Gone are the 90s when the job of HR revolved around hiring labor and managing their salaries and other perks. Now they have to deal with a lot more stuff, including recruitment, orientation, training, on-job growth and performance management. A growing number of businesses are moving away from piles of files sitting in the corner. Use of SaaS HR solutions (HRMS: Human Resource Management Systems) means all the information is centralized and can be accessed from anywhere, using almost any device.
The main benefits of using a SaaS HR solution include minimized paperwork, real-time performance tracking, better employee engagement, instant access to pay and benefits data and better data analytics. SaaS HR solutions can vary in functionality and can be broadly categorized into ‘best of breed’ and All-In-One solutions.
The ‘best of breed’ HR solutions refer to HR software designed to accomplish specific tasks such as ATS (Application Tracking System), which allows posting jobs, tracking candidates and hiring. All-in-one (AIO) HR solutions are designed to help organizations manage all their HR operations using a single platform.
However, AIO solutions might not be as strong in certain functions as their best-of-breed equivalents. For example, an ATS built into an AIO usually gets the job done, but users have to consider the best-of-breed solutions for specialized tasks. Most commonly used HR tools include:
- Application Tracking System
- Document storage and signing
- Employee directory and profiles
- Payroll processing
- Benefits management and administration
- Orientation and training
- Time-off management and tracking
- Time clocks
- Workforce planning
- Contingent workforce management
- Reporting and analytics
- Performance management
HRMSs are available for SMBs as well as large businesses. Freshteam, Sage HRMS, Gusto, Cezanne HR, Zenefits and BambooHR are some examples of systems designed keeping the needs of SMBs in mind. Examples of enterprise HRMs include SAP SuccessFactors, Oracle PeopleSoft, Workday HCM and Ceridian Dayforce.
Project Management software include tools such as collaboration and progress tracking that help PM teams improve efficiency and ensure that everyone is one the same page. The main area where SaaS PM solutions differ from on-premises solutions is the versatility they offer. Being cross-platform compatible, SaaS PM solutions are highly scalable, flexible and come with a significantly low upfront cost than on-premises solutions.
Businesses prefer SaaS PM solutions over on-premises software due to a number of reasons, which in addition to low upfront costs and flexibility includes quick deployment, anywhere-anytime access and better collaboration. SaaS PM solutions enable team members to stay on top of things from start to finish, including:
- Project scheduling
- Resource management
- Task management
- Workflow management
- Change Management
- Bug tracking
- Online communication
- Virtual meeting rooms
- Contact management
- Budget and cost tracking
- Custom reporting
- Custom templates
- Document storage and sharing
- Collaboration tools
- Expense tracking
On-premises PM software has its own limitations and are plagued by synchronization issues, especially when it comes to online collaboration, document sharing and remote work. SaaS PM solutions eliminate these barriers and allow team members to contribute from anywhere, using almost any device and give them real-time access to important information. SaaS solutions are also comparatively easy to learn and have a higher adoption rate.
Current and up-to-date data matters when it comes to complex projects and unpredictability surrounding them. Real-time data at the fingertips of project teams greatly increases the chances of making the right decision at the right time based on actual information and not just guess work. Some examples of popular SaaS PM solutions include Monday.com, Celoxis, Clarizen, Jira, Teamwork, Zoho Projects, LiquidPlanner and Wrike.
There has been an unprecedented surge in the use of cloud-based communication and collaboration tools, especially after the recent COVID-19 pandemic. Tools such as Zoom and Slack have proven themselves to be the perfect replacement for old-school methods, including phone calls, texts and even in-person meetings.
Collaboration refers to co-working to achieve a common goal, which was not easy for individuals and startups until recently. In the recent past, effective collaboration tech meant complex infrastructure, costly software, lengthy trainings, network installations and a lot of capital investment. The main purpose of collaboration and communication software is to get everyone together on a common platform where they can brainstorm and exchange ideas, review progress in real-time and ensure that everyone is on the same page.
Modern cloud-based collaboration tools have changed the whole scene and one-click solutions are now available for everyone. Many of these solutions are free-to-use and can be seamlessly integrated with other systems. That’s why it should not come as a surprise that by 2026, the collaboration software market is expected to grow[ii] to a $30 billion industry at a rate of 14 percent (from 2019/$9 billion).
These collaboration solutions encourage a global workforce, allowing businesses to hire talent from anywhere around the globe. From task assignment to document sharing and instant messaging, collaboration software covers everything a global workforce needs to stay productive. Businesses were quick to adopt to modern technologies in today’s fast-changing market scenario and realized the benefits of online collaboration tools including:
- Minimized paperwork
- Effortless task management
- Easy progress tracking
- Global talent hiring
- Improved efficiency
- Automatic document synchronization
- Online meetings
- Improved client relationships
- Improved employee satisfaction
- Virtually no barrier to entry
- Visual dashboards
- Activity feeds
- Kanban boards and Gantt Charts to get the bigger picture
Collaboration software are available in all sizes and cater to needs of customers ranging from freelancers to large enterprises. Asana, Slack, Zoom, Trello, Clickup and Confluence are among the most widely used collaboration tools, which are being used by individuals as well as large businesses.
Content Management Systems have come a long way from being a complex toolkit to an ‘everyday software’. A CMS refers to a toolkit or a web-based interface that allows users to create, manage and modify their websites or apps without having to code everything from scratch. One great example of CMSs is WordPress, which became a global phenomenon in a very short time. It provides users with the building blocks they need to create their own website without having to be a professional programmer.
In the e-commerce sector, Shopify is a CMS platform that makes it easy to add products and manage an online store. Different options are available for both individual stores as well as large businesses. The major benefits of using a cloud-based CMS platform include ease of use, quick deployment, simple maintenance and upgradation, scalability and built-in SEO options. Most CMSs are also compatible with a plethora of addons and extensions that further extend the core functionality.
Businesses use CMSs to streamline their authoring process, keep their website updated remotely without having to solely rely on the IT staff, easily integrate a website with other systems and business apps, take regular backups and optimize content. WordPress and Shopify CMS are not the only Content Management Systems that businesses use. Some other examples of CMSs include HubSpot CMS, Joomla, WooCommerce, Drupal, BigCommerce, Magento and Bitrix24. The key features that businesses look for in a CMS include:
- Ease of use
- Design options and templates
- Data portability (ability to move data from one provider to another)
- Integration support
- APIs, addons and extensions
- Help and customer support options
Running and maintaining an ERP on a company’s own infrastructure is costly. ERPs started gaining popularity in the 90s and 2000s and promised better efficiency by providing company-wide visibility and automation. Modern ERP systems are designed to automate a wide range of essential business operations and provide a single source of truth obtained from different sources including, accounts payable/receivable, general ledger, financial reporting and payroll.
ERPs are comprehensive systems and like other SaaS solutions ERPs also come in different flavors including generalist ERPs (commonly used), open-source ERPs (rare, but highly flexible), Vertical ERPs (industry-specific) and Small Business ERPs (a pared-down version of enterprise ERP).
Recent popularity of AI (Artificial Intelligence) and IoT (The Internet of Things), has led to some ERP trends, including SaaS/On-premises hybrid, two-tier ERPs (used by multinational corporations at corporate and subsidiary level), Social ERP aka ERP 2.0 (adds the social media to the mix) and Mobile ERP (native mobile apps).
Although ERPs are generally associated with large enterprises, there are many SaaS ERPs available for small and medium sized businesses as well. Some of the most popular SaaS ERP solutions include Oracle NetSuite, Acumatica, SAP Business One, Sage X3, Workday, SysPro and Microsoft Dynamics GP. The exact list of features and functionality/modules varies from one solution to other, but a modern ERP should cover (and/or integrate with) the following:
- Human Resource Management (HRM)
- Financial Management
- Sales and Marketing
- Supply Chain Management
- Inventory Management
- Business Intelligence
- Asset Management
- Industry-specific features for different industries such as healthcare, retail and government
ERPs help businesses and other organizations achieve improved operational flexibility and efficiency and promote a culture of collaboration and teamwork. Increased data security, compliance, accurate forecasts and reduced operational costs are some other benefits of using an ERP. However, businesses need to make sure the ERP they plan to buy supports the apps they are already using and fulfills regulatory and compliance requirements.
Similar to other industries, there are SaaS leaders that dominate the market. SaaS solutions are available in different flavors and for almost all on-premises software, there is a SaaS alternative. The rapid growth of the SaaS industry can be attributed to a number of factors, including technological innovations, competitive pricing, increasing demand, customer behavior and external factors such as shift to work-from-home policies.
Fast-growing businesses that need flexibility and scalability were quick to realize the potential of cloud-based technologies. As a result, the SaaS software industry witnessed an unprecedented growth in the last decade with the future expected to be even brighter. Moving to the cloud is not a question of ‘if’ anymore and has become a matter of when.
[i] “Global public SaaS market size 2008-2020”. Retrieved from https://www.statista.com/statistics/510333/worldwide-public-cloud-software-as-a-service/
[ii] “Collaboration Software Market Report Coverage”. Retrieved from https://www.gminsights.com/industry-analysis/collaboration-software-market