Software-as-a-service (SaaS) is becoming an increasingly viable choice for organizations in search of accessibility, functionality, and versatility in a cutthroat business environment.
It’s possible for companies to run SaaS software solutions and online data analysis without the need to rely on installing and running applications on their own computer systems and data centers. As such, these innovations are rising in popularity every year.
SaaS is taking over the cloud computing market. Gartner predicts that the service-based cloud application industry will be worth $143.7 billion by 2022 — a level of growth that will shape SaaS trends in 2021.
SaaS is a software distribution model that offers a lot of agility and cost-effectiveness for companies, making it an incredibly reliable option for numerous business models and industries. It’s also popular among businesses due to its simplicity, user accessibility, security, and widespread connectivity. In turn, software-as-a-service platforms streamline business models, resulting in maximum efficiency across the board. Today, most companies are in the process of implementing various business intelligence strategies, turning to SaaS BI tools to assist them in their efforts.
Last year was a breakthrough year for the SaaS world in many ways. With a new year on the horizon, in this article, we’ll explore 10 essential SaaS trends that will stand out in 2021. But, before we do that, we will discuss the general characteristics revolving around the industry that will help put additional light on the 2021 SaaS trends.
Before we dig any deeper into our top SaaS industry trends for 2021, let’s dispel some common myths surrounding the industry.
Dispelling 3 Common SaaS Myths
To offer you a full and panoramic understanding of the impact software-as-a-service is having on the professional world, and get the best context of the latest SaaS trends, here, we will dispel the three most common SaaS myths – consider them busted:
- SaaS tools offer just one application: On the contrary, SaaS tools range in form and function as much as any other type of software available today, so you can build a SaaS dashboard tool or use a SaaS-based email marketing solution, for example.
- SaaS is less robust and less secure than on-premises applications: Despite some SaaS-based teething problems or technical issues reported by the likes of Google, these occurrences are incredibly rare with software-as-a-service applications – and there hasn’t been one major compromise of a SaaS operation documented to date.
- IT professionals are anti-SaaS: Again, this is a complete myth, and like any disruptive development worth its salt, some IT professionals are reluctant to embrace SaaS as a concept. There are a large number of industry experts who recognize SaaS for ridding them of the day-to-day humdrum of traditional software while helping them better manage their own IT operations. This quote from Apple’s prolific founder, Steve Jobs, sums up the common view of SaaS from a technical professional’s perspective: “I don’t need a hard disk in my computer if I can get to the server faster…carrying around these non-connected computers is byzantine by comparison.”
SaaS: The Key Characteristics
Before we explore our essential software-as-a-service trends for 2021, it’s important to consider what defines SaaS as not only technological development but as a working business model.
- Flexible payment options: Businesses don’t have to go through the expense of purchasing software and hardware. Instead, they have the option of utilizing various pricing structures. Flexibility in payment models, where they only pay for the resource usage they need, for instance, is attractive for many organizations in today’s competitive world.
- Scalability: Cloud-based SaaS enables businesses to expand with ease due to its inherent scalability. Companies can be selective about the types of features and options they want.
- Updates: SaaS providers handle the necessary software updates and develop new features over time, so businesses don’t have to invest ample amounts of time in this particular area of operation.
- Accessibility: With SaaS, businesses have the mobility of accessing applications from any digital device and location, making it especially convenient for mobile platforms. Additionally, it boasts ease-of-use and is user-friendly.
- Increased collaboration: SaaS developments enhance a business’s ability to promote collaboration across teams and departments due to the facilitation of file sharing, in addition to distinct ease of reading and understanding across systems.
- Security: Most SaaS models are known for their enterprise-level security, which is a more holistic approach to security than many centralized, on-premise solutions. In Cloud SaaS, pre-existing disaster recovery protocols are in place to manage potential system failures. This means that your business’s data is available and secure regardless of a data breach or system failure.
As businesses continue to rely on innovative data discovery tools and technologies to increase both their productivity and their efficiency, and as new software-as-a-service trends continue to emerge, this young, groundbreaking industry can only go from strength to strength.
Even if figures diverge somewhat, the many forecasts conducted on SaaS industry trends 2021 demonstrate an obvious reality: the SaaS market is going to get bigger and bigger. Indeed, according to Bloomberg, public cloud platforms, business services, and applications (SaaS) will all grow at a 9% CAGR (Compound Annual Growth Rate) between last year and 2023, and worth $60.36 billion. A Betterbuys report reveals that the specific expenditure in the U.S. SaaS Industry is forecasted to reach $55 billion by 2026. And according to Gartner, the global public cloud service market is projected to grow significantly in 2021 and beyond.
All signs indicate that this coming year is going to be an interesting, trendsetting year for the trends in the SaaS industry. Of all the developments currently in the pipeline, these 10 SaaS industry trends, in particular, are showing signs of standing out as the most significant in 2021:
- Artificial Intelligence
- Machine learning
- Centralized analytics
- Vertical SaaS
- The growing need for API connections
- White label SaaS
- Migration to PaaS
- Enhanced mobile optimization
- Low-code capabilities
“Customers won’t care about any particular technology unless it solves a particular problem in a superior way.” – Peter Thiel, co-founder of PayPal, one of the planet’s biggest SaaS providers
The 10 Top SaaS Trends In 2021
Now that we’ve explored the key characteristics of software-as-a-service innovations, it’s time to take a deep dive into the top SaaS trends in 2021.
From the introduction of artificial intelligence to enhanced mobile optimization and beyond, these SaaS trends for 2021 will shape the sector in the dawning of the new year.
1) Artificial Intelligence
The first of our most impactful trends in SaaS is of the autonomous, self-learning variety.
Today, Artificial Intelligence (AI) is deep-rooted in the veins of our society. AI made the top 3 of our list of business intelligence trends for 2021 – and next year, it’s expected to make some serious waves. Artificial Intelligence technology is becoming more widespread; it's becoming a real game-changer, with a projected market value of $733.7 billion by 2027. AI optimizes business processes, increasing productivity and efficiency while automating repetitive tasks, and supporting human capabilities.
Within business scenarios, artificial intelligence (as well as machine learning, in many cases) provides an advanced degree of responsiveness and interaction between businesses, customers, and technology, driving AI-based SaaS trends 2021 onto a new level.
There are numerous features developed by modern software providers based on artificial intelligence, such as data alerts. With an AI algorithm using the most advanced neural network for anomaly detection, and a machine-learning algorithm for pattern recognition, these data alerts learn from trends and patterns and let you know as soon as something important happens.
That way, when a pre-set goal is met, or when something unexpected happens, you will be notified, enabling you to keep continuous control over your business. Since it is often easy to lose track of what really matters when so many KPIs have to be monitored, an online reporting tool will safely keep an eye on your data and anticipate any fluctuation and change – and alert you when it veers off course.
Artificial intelligence is positioned to disrupt the SaaS landscape in a variety of ways, improving the key characteristics of the SaaS model across the board. When SaaS is combined with AI capabilities, it enables businesses to obtain better value from their data, automate and personalize services, improve security, and supplement human capacity.
How will AI help to build a shining SaaS future?
- Personalization: Software is easier to use with technologies such as natural language processing (NLP), which automatically processes human speech patterns and voice control. This can be deployed across customer service functionality to improve customization and better address client needs.
- Speed: Artificial intelligence-enabled SaaS speeds up internal processes and operations, allowing businesses to obtain fast answers to questions, make quick forecasts, and speed up their overall level of responsiveness.
- Security: Due to artificial intelligence-enabled automation, and the ability of machine learning to recognize patterns, SaaS security is enhanced by the quick identification and remedy of potential threats with built-in self-recovery.
2) Machine Learning
Machine Learning (ML), a subset of AI, is utilized in SaaS to automate responsiveness in customer service reports and applications, such as AI-powered chat operations with live chatbots. It will also automate the onboarding process of SaaS. As ML is built on an autonomous operational model, new innovations will facilitate software and platforms that empower businesses to automate significant chunks of internal operations other than customer service or experience alone.
A fresh injection of ML innovation will empower SaaS-style offerings to become self-improving, offering a level of intelligence and operational efficiency that will drive a host of industries forward.
Machine learning is one of the fastest-growing segments of software and, as such, it’s a hot SaaS 2021 topic. As ML becomes an integral part of the AI-based software-as-a-service model, an increasing number of platforms will emerge that will help businesses across sectors:
- Train their software to learn from every task or interaction, gaining a greater level of intelligence and efficiency in the process.
- Dig deeper into contextual data and insights - the kind that can help you gain a real edge on the competition.
- Improve internal collaboration and operations through more sophisticated communication models.
On a highly-commercial level, Netflix’s personalized content suggestions and Waymo’s self-driving cars that calculate increasing potential risk factors or journey hold-ups overtime are examples of ML in SaaS-type models. As we enter 2021, these innovations will prove to be the tip of the automation iceberg.
3) Centralized Analytics
The third of our essential SaaS industry trends is data-driven. As digital transformation across industries accelerates, businesses across sectors look to data to streamline their organization while gaining a deeper insight into their customers or users. Investment in analytics-driven software-as-a-service innovations is expected to soar.
In fact, industry experts believe that investment and value in analytics-centric SaaS models will rise by 23.3% by 2022. In 2021, and beyond, analytics will become a central component of many service-based software platforms, making business intelligence and data-driven decision all the more powerful for anyone looking to get ahead of the competition.
This centralized analytics will enable users to look into their data from a single point of truth, discovering hidden insights by utilizing modern solutions such as performance dashboards, where every member of the team has access to the most vital business information. Moreover, the centralized nature of SaaS models will enable users to access data from any device, at any time. Modern online business intelligence makes this happen with the help of advanced software capabilities and the online environment where each member of the team has access to their analytics.
4) Vertical SaaS
Our fourth forecast for SaaS trends in 2021 is Vertical SaaS. Whereas Horizontal SaaS focuses on clients across any sector and industry, Vertical SaaS is completely customizable, targeting clients within specific industries and supply chains. Some examples are healthcare analytics software, retail analytics, or modern logistics analytics. Companies who are looking to benefit from specialization are finding Vertical SaaS to be a cost-effective, industry-specific option that allows them to refine the customization of certain features.
Why are Vertical SaaS trends going to have such an impact in 2021?
Vertical SaaS providers also have the ability to adapt features according to client demand and industry, and effectively address customer needs within their niche. This results in more flexibility and upselling opportunities, and lower customer acquisition costs.
Vertical SaaS also provides the following benefits:
- Customer intelligence: Enables businesses to obtain industry-specific customer data and intelligence, which plays a critical role in gaining customer-focused insights.
- Pre-defined metrics and KPIs: Vertical SaaS is already integrated with pre-defined metrics, KPIs, and analytics that businesses can utilize to assess and address daily and long-term processes and performance.
- Business value: Software is designed to meet industry requirements; therefore, it provides a higher degree of business value for company operations and performance.
- Improved data governance: Vertical SaaS is positioned to address data governance procedures via the inclusion of industry-specific compliance capabilities, which has the additional benefit of providing increased transparency.
- A higher standard: Higher quality service from industry-specific Vertical SaaS providers will continue to emerge, as each developer aims to distinguish itself from the ever-increasing crowd.
5) The Growing Need For API Connections
The API (Application Programming Interface) has been a fundamental part of software development for years, and this is precisely what our fifth SaaS trend focuses on. With the explosion of SaaS solutions and adoption by the market, the need to integrate them into an existing business system appeared. Some companies may want to migrate all their data to a cloud platform, but many actually would rather harmonize it with their already existing infrastructure in order to improve it – and this is where the problem lies.
At first, SaaS providers didn’t come with a complete integration solution. That failure served to complicate the work and caused them to disappoint their customers as a result. They would then redirect their clients to a third party to supply the specific APIs enabling the customer to integrate the cloud solution into their existing system. It was indeed better for the SaaS developers not to reinvent the wheel, and to win some precious time and resources relying on third-party APIs. Their go-to-market time frame was shorter, and they could focus on their core capabilities to develop differentiated functionality.
However, more and more SaaS vendors tend to provide greater integration capabilities instead of redirecting their customers to third parties.
If you are looking to invest in a cloud vendor’s services, you should ask the following questions beforehand to ensure a seamless integration:
- What capabilities is the provider offering me to integrate the SaaS within my existing business system?
- Can this provider also integrate the legacy systems I use?
- Is my data protected while the integration process is worked through?
6) White Label SaaS
One of the latest and most intriguing current SaaS topics, the emergence of white labeling will become all the more prominent in 2021.
Essentially, SaaS white labeling is a process where a software-based business creates a fully developed, tested, and finalized platform and then sells it to another company so they can customize and sell it under their own branding. It can be also a part of embedded BI tools, where companies integrate a solution within their own application.
The white label revolution will prove particularly valuable to startups looking to gain market share quickly and with less logistical or financial costs to consider. If the framework for a platform or development is available right out of the box, startups can focus on their value proposition, strategy, and branding, rather than having to start from scratch. In practice, BI dashboard software can be used as a SaaS solution that is completely white-labeled and adjusted to specific branding needs of a company or departments.
Businesses that sell their white label products also stand to expand their revenue streams by selling their platform framework to other brands and startups. There are brands that develop their own mobile payment and loyalty program application but also white labels it for other brands, so they can market and promote the platform as their own.
White label SaaS - a trend that will shape the state of the industry in 2021.
7) Migration To PaaS
As the software-as-a-service industry evolves and innovation increases, many developers or providers will focus on customer retention on top of customer acquisition.
That said, in 2021, we expect to see SaaS migrating towards the realms of PaaS (platform as a service) – developments that empower businesses to build custom apps as add-ons to their original services. The likes of Salesforce and Box have recently launched PaaS-centric services in a bid to hold a strong market share in their niche, and we expect to see this SaaS trend become all the more prevalent this coming year.
To put the relevance of this trend into perspective, here are three key advantages of using a PaaS development:
- Agility: The enhanced features, functionality, and ability to customize will enhance your overall business agility, giving you more time and creative space to innovate and focus on your core commercial initiatives.
- Scalability: PaaS offerings are, by their very nature, robust, flexible, and accessible, which means you will be able to scale your business more easily by using a platform as a service.
- Security: A distinct advantage of the PaaS model is security, as the vast majority of such developments perform a host of automatic updates on a regular basis.
The eighth of our software-as-a-service trends comes in the form of a little something called micro-SaaS.
Like any innovative and invaluable industry on the rise, large numbers of players begin to enter the arena, saturating the market and intensifying the competition – which means in 2021, and beyond, SaaS companies will have to find new ways to innovate, offer value, and connect with new prospects.
In response to a new, more cutthroat climate, we expect to see more micro-SaaS innovations emerge from the woodwork this coming year. Typically, micro-SaaS businesses are run by a small team, sometimes even by one or two people. Micro-SaaS products are usually complementary add-ons to existing platforms or developments, created with the aim of improving a missing feature or enhancing an existing SaaS product.
These more niche, more ‘miniature’ SaaS offerings could prove increasingly valuable to businesses across industries in 2021, which means we can all expect a host of fresh micro-SaaS innovations over the next 12 or so months.
To clarify the meaning of micro-SaaS in a nutshell, here is a definition of the concept explained by Storemapper’s Tyler Tringas:
“A SaaS business targeting a niche market, run by one person or a very small team, with small costs, a narrow focus, a small but dedicated user base and no outside funding. Hence, micro-SaaS.”
9) Enhanced Mobile Optimization
In our mobile-driven age, we’re free from the shackles of time or geographical location, meaning that people can connect with their peers and remain productive 24/7, 365 days of the year.
Increasingly, companies across sectors operate critical parts of the businesses from their tablets or smartphones. Plus, more employees than ever feel empowered to perform their jobs better by being able to work with dynamic mobile dashboards and various tools.
As we move towards a new year at warp speed, an increasing number of software-as-a-service vendors that adopted a mobile-first mentality last year will develop new solutions to meet the growing demand of the mobile SaaS market - a trend that has been accelerated by the enduring threat of COVID-19.
In 2021, enhanced mobile optimization will become a top priority for almost every software-as-a-service startup or provider.
Forward-thinking businesses will turn to mobile optimization reporting tools to ensure their own innovations meet the needs of an increasingly mobile market while making their designs more accessible for older cohorts, the neurodiverse, or users with sight or hearing impairments.
The world has indeed become even more mobile, and to thrive in the long term, software-as-a-service providers will place a greater emphasis on their mobile-first design and functionality.
The main areas of enhanced mobile optimization developments in 2021 will come in the form of:
- Increased mobile app personalization - one of the SaaS industry trends that tie in with machine learning and AI.
- Ultra-responsive mobile features and functionality, including task optimization, one-swipe actions, and intuitive filtering capabilities.
- Increased accessibility for those with autism, sight or hearing issues, and learning difficulties.
- More options for in-app or platform user feedback for more valuable improvements and updates.
- Immersive mobile experiences by leveraging augmented and virtual reality capabilities.
To cut through the noise and push yourself to the front of the pack, offering robust and reliable BI tools that work across desktop and a range of mobile devices is essential.
Mobile devices and screens require a unique set of features and functionality, and by placing their focus on mobile-first design & development, SaaS vendors are likely to enjoy a healthy return on investment next year and long into the future.
Mobile-first is, without a doubt, one of the most essential current SaaS topics of 2021. There will be more portable platforms available at your company’s disposal than ever before — don’t miss out.
10) Low-Code Capabilities
Software-as-a-service platforms continue to expand their reach year-by-year and 2021 will be no exception. Particularly due to the emergence of ‘no-code’ and ‘low-code’ platforms,
tech startups can bring their SaaS-based content to life with less technical experience.
These out-of-the-box style data centers (SaaS platforms for SaaS platform providers, if you will) won’t eliminate the need for developers or engineers. But, having less code to write to form the foundations of your platform or solution means that technical staff or contractors can spend more time driving innovation or sweating the stuff that results in a real competitive edge. For example, you can implement a BI solution that is completely adjustable to your industry and department and relieve your technical team of endless supporting tasks. That way, they will have more time to focus on the development and engineering itself that will, ultimately, bring sustainable development to your business.
Enhanced SaaS Solutions For 2021
These 10 essential trends in SaaS will shape the landscape in 2021. Many developments have spilled over from last year, and some have evolved, paving the way for brand new concepts that will propel the industry forward. Artificial Intelligence-empowered SaaS, Vertical SaaS, the growing need for and development of API connections, increased thought leadership, a migration to PaaS, a plethora of micro-Saas offerings, low-code capabilities, and enhanced mobile-first innovations are here — and innovative SaaS solutions will only continue to grow in the coming years.
“Dreamers are mocked as impractical. The truth is they are the most practical, as their innovations lead to progress and a better way of life for all of us.” - Robin S. Sharma, author & tech advocate
Above all else, these inspiring trends in SaaS are a testament to the enduring future of the industry and our increasing societal demand for robust software-centric solutions across the board. The revolution is here, and it’s digital. As more companies migrate towards a cloud-based, data-driven existence, the scope for offering practical software innovations will continue to rise, and rise, and rise.
As data continues to be the driving force behind smart business strategies in a digitally dependent world, SaaS options are going to be an increasingly convenient and affordable option across industries, both now and in the coming years. By embracing these essential SaaS industry trends, trusting your products, and keeping your finger on the pulse, you will hit the ground running in 2021, enjoying increased success, growth, and access to invaluable business insights.
"Businesses can’t afford to react to what their customers want; they need to anticipate their needs." - Parker Harris, co-founder of Salesforce
For more digitally-driven insights, check out our essential guide to getting started with big data analytics and business intelligence for small business—essential reading for go-getting modern businesses of all shapes and sizes.
It’s time to level up! If you’re ready to grab the future of SaaS by the digital horns and benefit from your own data-driven software-as-a-service solution, try our 14-day free trial and make innovation, intelligence, and growth your priorities in 2021.