Andy Mura is an inbound Marketer, entrepreneur, speaker, and SaaS enthusiast currently working in Germany as the Head of Marketing at Userlane, the user onboarding and support automation platform that drives customer success.
The modern B2B SaaS market is reaching full maturity.
After attracting early adaptors and transforming the startup world, SaaS has conquered the enterprise world as well. Large corporations, such as Oracle, Microsoft, Adobe, and SAP, have shifted their focus from stationary, on-premise software to subscription-based cloud solutions.
And in turn, even the most conservative enterprises are rethinking their infrastructure to leverage the flexibility and reliability of modern SaaS, PaaS, and IaaS solutions.
Companies will soon run solely on SaaS applications. In fact, there are many reasons that lead firms to embrace this new model.
In this Process Street article we’ll cover:
- Why are B2B SaaS applications on the rise?
- The 9 essential elements of B2B SaaS applications
- The growing world of B2B SaaS applications
Why are B2B SaaS applications on the rise?
Corporations worldwide choose SaaS because:
- they can reduce costs for setting up and maintaining a local infrastructure,
- they can work with up-to-date software applications that are more stable and secure,
- they can overcome issues connected to legacy systems, and
- address challenges thanks to the flexibility of adopting on-demand services that revolve around decentralization and virtualization of resources and applications.
Most modern software solutions are only available as cloud applications, and well-established providers are adapting. The first step traditional vendors take is to offer a subscription model for their software. Over time, the path leads to adding the option to choose between subscription based, on-premise, or cloud.
Finally, many providers see no reason to offer support for their on-premise applications and discontinue such a business model.
Even though the SaaS model is way older than people think, and the majority of software applications were distributed as SaaS in the 1960s and 1970s, the big boom for modern cloud applications is quite recent and connected to the ease of distribution through broadband internet connections.
Salesforce has played a major role in the history of SaaS. Unlike other B2B software providers that have had to adapt to the market requirements, Salesforce was born as a pure SaaS and managed to introduce several applications in companies of all sizes, thus opening the door for all upcoming vendors that followed suit.
According to a study conducted by Gartner, the market for Saas has reached a volume of approximately $85bn. The same study underlines that the total revenue for cloud solutions exceeded $175bn in 2018 and is about to hit $206bn in 2019,
Such a high-yielding ground has given birth to plenty of SaaS businesses that have flourished over the course of the past two or three decades, and the market is steadily growing at a CAGR of 32% according to the 2018 SaaS industry report.
Another signal is the fact that big M&A activities have shaken up the sector over the past few years. Think of Tableau, Qualtrics, MuleSoft, Marketo, SendGrid, or Magento (to name just a few acquisitions that happened over the past 12 to 15 months).
And according to Jason Lemkin, the era of the $1bn+ acquisitions has just begun.
With an increasing number of decacorns (yes, they’re a thing now!), we have more and more companies that can afford to spend a mere 10% of their market cap to acquire promising unicorns.
And let’s not forget about the crazy public offerings we witnessed over the past few years (e.g. Atlassian’s $4bn IPO). There’s lots of potential for great exits.
And this makes the SaaS market even more palatable!
But what’s the consequence? Obviously, hyper-competition.
Basically, every modern SaaS solution needs to share its turf with other companies that offer more or less the same service.
The key to survival is quickly adapting to the modern trends linked to the current requirements.
The 9 essential elements of B2B SaaS applications
Here’s a short list of some of the winning traits of modern SaaS applications.
B2B SaaS features:Integrations, Integrations, Integrations
The first important element of modern SaaS applications is rooted in the fact that in the era of digital transformation, companies need to have a complete overview of the entire customer journey to provide a superior customer experience.
A potential issue connected to cloud services might be the emergence of information silos in enterprises. To prevent data from being segregated in separate cloud silos, SaaS companies need to focus on creating easy-to-deploy integrations within the client’s ecosystem.
Cross-functional units require access to centralized data which need to be seamlessly shared by applications to manage and optimize operations throughout different steps of the customer journey or supply chain.
This means that SaaS applications need to exchange and interpret information in a complete ecosystem that forms the substrate for digital operations. No application can live on its own in a separate bubble.
SaaS applications need to be connected and APIs need to be treated as separate extensions of the product that perfectly integrate into the business infrastructure.
B2B SaaS features: Portability
A long time ago people would go to work, punch the clock, sit at their desks, and boot their PC while having coffee with their colleagues. At 5pm, they would switch off their computer, leave their office, and go home. Work was what happened in the office.
Now, the line that curbs your workplace is quite blurry in comparison. Work happens everywhere you have access to a stable wi-fi connection.
We work from home, we work remotely, we work when we commute, or when we’re at the airport for a business trip.
We use mobile devices and laptops. SaaS applications need to ensure that you can start a project on your phone before meeting with partners downtown, review it with colleagues on your tablet in the office, and finish it on your laptop from your local Starbucks.
Complex applications struggle with portability, of course. But many vendors try to offer “light” mobile versions that can at least provide access to data and analytics for a quick overview on the go.
Companies benefit a lot from the flexibility offered by cloud data and mobility, so much so that over 65% of businesses in the US allow employees to connect to their corporate network using their personal devices.
Failing to adapt to the mobility trend means lagging behind in the SaaS race.
B2B SaaS features: Microservices
Introducing a microservices-oriented approach to development is proving to be vital for modern SaaS businesses.
With so many runners at the starting blocks, gaining speed and saving costs become crucial components of a winning competitive strategy.
The ability to quickly develop modular components that communicate via APIs accelerates release and boosts flexibility and scalability – all while reducing complexity with lightweight, independent services.
Customers are the secret true owners of a SaaS roadmap and nobody can predict what the future requirements will be in 12, 15, or 18 months.
Agility is the key to successful operations and businesses that can move quickly are 3X more likely to grab the biggest market share.
B2B SaaS features: Onboarding Automation and Performance Support
B2B SaaS applications are undeniably becoming more complicated. This occurs partially because vendors need to take into account the requirements we just described above but also because of the new scope for digital operations.
Software needs to guarantee compliance and mirror generic and specific internal processes while simultaneously offering a large degree of customization and flexibility to adapt to specific use cases.
Add analytics, reports, and constant updates and you’ll soon realize how important it is to embed user onboarding software and on-screen contextual help into your SaaS product.
Step-by-step in-app guidance is essential to drive feature and product adoption in order to make sure users achieve all their goals while working in a modern software application.
B2B SaaS features: Intelligent Applications
Even though Artificial Intelligence and Machine Learning have become some sort of annoying buzzwords, the amount of data and the complexity of modern processes require applications to be intelligent.
What I mean by this is that software solutions need to provide information, automation, and insights, not only raw data.
Raw data is useful to visualize specific patterns and make simple decisions, but digital transformation is not only connected to customer intimacy but also to speed.
Intelligent solutions can interpret data, suggest solutions, or test multiple hypotheses way quicker than any human being. Think of solutions like Metadata or Oribi, for example. Or just look at what Google analytics or AdWords do for you: they provide clear suggestions that support your goals. No options. Just clear answers!
The ability to autonomously steer processes in the right direction is a key element of present-day SaaS applications.
B2B SaaS features: Dealing with Legacy Systems
B2B SaaS applications can be complex because they have to cater to the needs of several units within the same company and in many companies in different industries.
There’s no more vertical versus horizontal specialization, and the ability to perfectly integrate with other solutions (as pointed out above) makes SaaS the most flexible tool in the IT ecosystem.
Nonetheless, contemporary SaaS products need to deal with legacy systems that corporations tend to keep running.
Without being able to create such connections, getting your foot in the door of larger organizations becomes complicated.
Relying on DevOps
DevOps bring together development and operations under the same roof to boost efficiency and innovation.
Modern applications need to hinge on and foster collaborative software development.
SaaS products must address and solve major issues without creating any disruption as a side effect.
Therefore, smooth migrations and flawless rollouts rely on continuous testing synced with QA and DevOps to offer stability and rapid adjustments.
DevOps-friendly SaaS that integrate with the latest deployment technologies are generally characterized by better performance in an age in which code needs to be distributed and implemented quickly while generating minimum friction and additional complexity.
B2B SaaS features: Offering a Customer Success Program
As mentioned above, SaaS applications need to solve several problems to be deeply integrated within a company’s infrastructure and generate immediate ROI. This, in turn, leads to complexity and confusion. A great UX, interactive contextual support, and educational content help the client identify specific use cases and trigger user and company adoption.
However, the best way to make sure customers leverage the full potential of a SaaS application, assign specific KPIs, and achieve success is by offering a customer success program.
This increases trust by removing uncertainty and creating a special bond with a brand. Enterprise customers, in particular, need to be guided throughout the implementation and/or migration process, require project management support for their rollouts, and expect to be able to set metrics and achieve specific objectives.
Successful SaaS companies care for the success of their customers and go the extra mile to ensure that they have a great experience throughout the entire relationship with the brand.
And this obviously leads to customer retention and organic expansion.
B2B SaaS features: Centralized Login
Security and compliance come first! However, when I think about my weekly routine, I see that I usually log in to at least 30 to 35 different applications.
Cloud solutions live, well…in the cloud. Even if not everybody is as crazy about SaaS tools as I am, it’s not uncommon for people nowadays to switch between multiple applications several times a day.
Unless customers use a password management system tool, the process can quickly become cumbersome and frustrating. Great SaaS applications have an outstanding identity management system that either relies on corporate logins and browser identity or simply allows users to remain signed in for longer periods of time.
Maybe this point doesn’t represent a real deal breaker, but it still is an important element in the UX.
The growing world of B2B SaaS applications
SaaS applications and cloud solutions, in general, are destined to dominate the global tech market thanks to:
- Applicability on mobile devices
- Security and stability,
and several other benefits that are pushing companies to revolutionize their entire IT infrastructure.
Fierce competition makes this market dynamic tough and not suitable for the faint-hearted. Adapting to the constantly-changing business requirements is paramount when it comes to product-led growth.
The market demands lightweight on-demand software that solves multiple problems while being fully portable and capable of exchanging data with all other applications.
Salesforce was a pioneer in the industry by only offering a cloud-based solution to their customers over twenty years ago.
Companies like Zapier and MuleSoft (recently acquired by Salesforce) are the modern heroes that took the concept of data integration and exchange to a whole new level.
Who will become the hero in the era of intelligent B2B SaaS solutions?
Does your company run on SaaS? Do you run a SaaS company? Will the rise ever stop? Let us know in the comments below!