The rise of SaaS in a post-pandemic world

Globally, businesses are increasing their dependency on SaaS platforms, with Synergy Research Group reporting that overall SaaS spending hit the $100 billion [i]annual run rate last summer. This has pushed experts such as Gartner to forecast, even before COVID-19, worldwide public revenue growth of 17% in 2020 [ii]– with SaaS at its core. 

In the last two years, there has been a significant rise in subscription-based software and – as 2020 is overshadowed by a global pandemic – there’s strong indications that SaaS will only continue to grow. Since countries around the world went into ‘lockdown’ in one form of another, shifting workforces from office-based operations to remote, cloud-based software has become essential for all businesses with teams working from home, ensuring accessibility, collaboration and business continuity. As companies across the world adapt to the ‘new normal’, SaaS will only continue to rise.

Whether your business is already relying on the use of cloud-based SaaS applications, or you’re considering implementation, it is important to assess the risk and benefits to your business.

Risks of SaaS:

1.       It’s important to clearly define the scope of responsibility of your new SaaS platform at the outset. Are you implementing a collaboration tool to support working across teams, or are you implementing a core business platform to support the day-to-day operations of your business? Due to the ease of setup and configuration of SaaS platforms, businesses can easily sleepwalk into the adoption of systems without realising the long-term implications. For example, a business adopting a simple collaboration tool to track employees, but ends up using it as a HR system to manage hundreds of staff, will see risk in the initial solution not supporting requirements as they ought to be using a domain specific HR application.

2.      It is important to consider whether your SaaS platform provides the ability to extract your data, whether this is to move to another software supplier or provide the option to perform external functions yourself such as reporting and analytics. With constant shifts in markets, services and processes driven by changing environments – especially during a global pandemic – it’s important to ensure your business-critical data is not locked-in to one particular product, should your needs change.

3.      For businesses with straightforward processes and operations, SaaS applications offer an easy to implement solution, without the need for major organisational and process re-engineering. However, some SaaS platforms provide the ability to make significant customisations to the core system, presenting risk in businesses wandering away from the products core development path; with changes becoming harder to manage when newer versions are released. This can also result in businesses deferring product upgrades to prevent this, presenting further risk in working on outdated platforms, with potential security flaws and minimal support.

4.      SaaS platforms often provide clear information on most limits and restrictions; however, some can be less obvious. Such restrictions – especially those that are set in stone and can’t be solved with a licence upgrade – can cause significant operational issues. For example, maximum API calls within a 24-hour period. Companies must identify these limits and analyse the scenarios that could breach limits and develop a plan to mitigate the impact.

5.      Businesses can initially be attracted to the simplicity in product licensing offered by SaaS platforms. However, organisations need to be aware that this can often evolve into complex, opaque pricing models around seat or site licenses, with additional costs in factors such as transaction limits, additional environments and third party integrations. In order to mitigate this, businesses should first investigate whether there is a linear per-user cost and identify any trigger points.

Benefits of SaaS:

1.       The most notable benefit of cloud-based SaaS platforms is the scalability they offer businesses. Cloud solutions help businesses to scale up or down with complete flexibility, so they can manage volatile conditions where there’s a need to adapt, scale and react quickly. A recent example of this is e-commerce businesses needing to rapidly scale processing and distribution functions in order to support a sudden increase in users and online orders during the lockdown period. From a product user standpoint, SaaS products also offer the option to scale-up and scale-down types and numbers of users with ease.

2.      SaaS platforms can also help businesses to significantly reduce IT responsibilities and costs. With cloud-based SaaS applications – when compared to on-premise solutions with remote workers – there is no requirement to manage network connectivity and hardware scaling issues. This removes costs in the infrastructure itself, as well as the resources required for the implementation, ongoing maintenance and support.

3.      Businesses can also develop their own SaaS platforms, providing web and mobile access to existing legacy software platforms, providing the benefits of SaaS without the need to replace or overhaul existing systems. This enables businesses to move towards a software-and-a-service licensing model, by providing customer access to internal systems.

4.      With cloud-based SaaS applications, infrastructure support is often simpler. SaaS platforms –as opposed to on-premise solutions – have direct control and access to production environments, enabling them to investigate and solve issues within one point of contact.

5.      With new versions continually released within SaaS applications usually part of the service, upgrading is made simple, removing the risk of your software becoming outdated. With different providers having different approaches, businesses may either see upgrades in the form of client planned releases or automated deployments. Overall, this supports shorter release cycles, providing new features faster, as well as bugs being resolved quicker.

By implementing cloud-based SaaS applications, businesses can cut down costs, be more efficient with resourcing and future-proof the businesses from a scalability and usability standpoint. In order to ensure there is little risk involved, businesses should adopt SaaS platforms that solves both current and future needs, avoiding vendor lock-in, and ensure they ask the right questions at the beginning of their journey.

Looking forward to a world where business partners and suppliers expect complete flexibility is no longer the case – we are already there. Technology such as cloud-based SaaS software has enabled us to adapt and work reactively in a changing and demanding environment.