According to the research carried out by Gartner, the SaaS industry is worth approximately $172 billion and has increased in size by around 500% in the past seven years.
This makes it one of the fastest-growing tech segments and one you should consider building in if you want to achieve ramen profitability.
It is estimated that companies with fewer than 50 employees use an average of 16 SaaS applications, while companies employing 50 to 99 employees use an average of 24 SaaS applications. Somewhere in all these numbers lies a huge market opportunity for aspiring founders.
What Exactly Is A SaaS Business?
In 1999, Salesforce launched what is considered the first SaaS solution ever built. It was a customer relationship management (CRM) platform, and it was a successful venture because it became a hit in the dot.com bust of 2001.
In the early days, when people thought of SaaS, they thought of startups and small businesses that were unstable. But with several improvements to the internet came major improvements to the SaaS industry. Nowadays, corporate organizations even trust SaaS inventions to manage their complex day-to-day operations.
A SaaS (Software as a Service) business is any organization that creates an application/software and makes it available for people to use over the internet. With SaaS businesses, the invented software is located on the company’s server and anyone who subscribes to the service can access it remotely.
There are different kinds of SaaS businesses, but some of the most popular ones fall under the following categories:
- Customer Resource Management (CRM): Think about names like Hubspot, Zoho, Zendesk, and Salesforce. They are all major players in the CRM game, and they allow their users to manage and track all customer interactions.
- Enterprise Resource Planning (ERP): The name that comes to mind when we think of ERPs is Oracle. ERP software helps businesses with a lot of day-to-day activities as they help manage processes like accounting, procurement, project management, and more in an organization.
- Accounting and invoicing: Billing and invoicing are an important part of any organization, and SaaS businesses like Xero and Quickbooks make the process very easy. Some even offer financial tracking and reporting services.
- Project management: Asana, Trello, and Monday.com have a big share of this SaaS market, and they help businesses organize their tasks and stay on track with any given task.
- Web hosting: Having a website and an online presence is a big requirement for any business nowadays, and SaaS businesses like Tiiny.Host which was founded by a member of Ramen club’s community, ensures there is no downtime with a user’s website.
- Human resources: Managing the hiring process, payroll, and tracking employee hours is a part of human resources that SaaS businesses like BambooHr have taken over.
- Data management: The SaaS products contained in this category help analyze and secure a company’s data.
- Content Management: SaaS applications like Buffer, Wordpress, and Hootsuite help companies schedule and manage the content that goes out on different social media platforms and websites.
What SaaS trends can aspiring founders look out for outside these categories?
- Integration: Many businesses worldwide use Slack for communication, but we are willing to bet that another great reason companies use Slack is how easy it is to integrate apps with Slack. When SaaS solutions were first created, integrations were not a thing, but nowadays, businesses need multiple software solutions to complete a task or to run their day-to-day activities. They would rather do this with as few tools as possible, rather than have an assorted range of SaaS products. That is why Integrated Platform as a Service (iPaaS) is becoming a thing. SaaS integration for the most part means connecting one SaaS application to another cloud-based software application with the purpose of sharing data with each other. Finding a way to integrate with existing solutions rather than creating a stand-alone SaaS product can increase your chances of adoption, especially if you are integrating with a SaaS business with a large customer base.
- Solutions that scale marketing efforts: Businesses are always going to employ marketing efforts, and any marketing solution that allows them to stay ahead of the curve and reach more customers easily will be greatly appreciated. With this SaaS trend, businesses are going to need tools that help them scale their video marketing efforts, and their personalization efforts. Businesses also want tools that allow them to automate targeting and campaign efforts. Finally, they greatly want tools that can build their social trust, increase traffic, raise awareness and attract the most qualified leads. If you can do one or all of these, you might have a winning formula.
- Vertical SaaS solutions: Most SaaS solutions we have right now are horizontal, which means they cater to a large audience. But we are going to see the rise of vertical SaaS products that will focus on serving one industry or one niche, like a CRM platform for the healthcare industry. If you are thinking of capitalizing on this trend, you need to think big when it comes to choosing the right niche and really employ a lot of research.
- The Rise of Micro SaaS: Tyler Tringas, founder of Storemapper, coined the term Micro SaaS. He defined it as a SaaS business targeting a niche market, typically run by a very small team with a dedicated user base and no outside funding. A great example is Plausible, which is an open-source web analytics tool and has a reported monthly revenue of $42K. There are numerous opportunities in the Micro SaaS industry because, in most cases, when you build a micro-saas platform, you are providing a valuable add-on to an existing tool that people require. Now, if you can just identify that missing add-on, you’ve got yourself a profitable business.
- Centralized Data Analytics: A lot of businesses rely on data to function and make their operational processes better, and therein lies a good SaaS opportunity. Amazon identified this opportunity in 2020 and released Amazon QuickSight, a powerful BI platform that allows businesses to understand data through querying in natural language. More companies are following this lead and launching tools such as Microsoft Power BI, Oracle Analytics Cloud, and SAS Visual Analytics. According to Verified Market Research, the analytics industry is expected to be worth $99 billion by 2028, and if you play your cards right, you can get a piece of the pie.
- AI: AI (Artificial Intelligence) used to seem like such a faraway concept that only existed in sci-fi movies, but now it doesn’t seem so farfetched, especially with the SaaS industry. From Apple’s Siri to Windows Cortana to Amazon’s Alexa to website chatbots, AI has touched almost every aspect of the SaaS industry and is being used for so many things, like automating customer processes and handling customer interactions. It is also being used to identify and analyze not just what customers are doing now, but what they will do in the future. Despite what seems like serious technological advancement, the role of A.I. in the SaaS industry has yet to be fully explored and a lot of opportunities are still available.
- Machine learning: Machine Learning (ML), is generally referred to as a subset of AI, and like AI, it will experience unprecedented growth in the next few years. We will begin to see machine learning software that leads to better operations efficiency and intelligence in SaaS solutions. New innovations in machine learning will facilitate software and platforms that empower businesses to automate significant chunks of internal operations other than customer service. Data preprocessing, facial recognition, data visualization, natural language processing (NLP), predictive and preventive analytics, and deep learning are all opportunities that lie within the machine learning trend.
How Can You Tap Into These SaaS Trends?
- Launch a Freelance Service Business: If you’ve identified a niche you think might work for you, why not start out with freelancing? Offer one or ten people your services on the side and see how receptive they are to it. Then you can move full steam ahead with your SaaS business.
- Crowdfund from friends and family: Building your initial MVP might cost some money you don’t have, and you might not be able to get any money from investors. This will be a good time to tap into the goodwill and love that your friends and family have for you.
- Build in public and build a community online: Get people invested from the beginning in whatever SaaS business you are trying to build. Let them go along with you on your journey and processes so that when you are ready to launch, you have at least one person that is willing to pay for what you’ve created.
How Can Ramen Club Help?
In addition to providing you with a community of founders that were once where you are and can offer valuable advice, we also have an in-house validation consultant that is willing to look at the ideas that you’ve come up with and validate them. To join Ramen club, kindly visit https://www.ramenclub.so/#join-ramen-club. We look forward to welcoming you.