The SaaS market is expected to grow to over $230 billion by the end of 2024.
What's fuelling the rapid growth of SaaS? The rise of centralized data-driven analytics, the adoption of cloud-based solutions and the array of integrations with different tools.
As a B2B SaaS SEO and content marketing agency, we work closely with the SaaS industry. We've read hundreds of data reports, surveys and statistics and compiled the findings in this article to get your business geared up for 2024.
What We'll Cover:
SaaS Market Overview
Let's jump back to basics for a second. SaaS is a software licensing and delivery model where the software is licensed on a subscription basis and hosted online or through the cloud. Adobe, Salesforce, Hubspot and Atlassian are examples of successful SaaS businesses spanning various sectors.
And the market is booming. The global SaaS market will grow at a CAGR of 18.7%, with an expected market value of over $900 billion by 2030.
Many firms are encouraging the adoption of cloud-based solutions for future market growth. Whether it's communication or project management software, organizations are adopting more and more SaaS tools to manage tasks. The average number of SaaS apps used by organizations is now over 110.
Here’s what the market share looks like in the SaaS industry.
SaaS Market Growth Factors
The reliance on tech has been increasing with the increase in hybrid and remote work models after the COVID-19 pandemic. Businesses are turning to SaaS solutions to help them navigate this new way of working.
Here are eight other factors that have led to this massive cloud service market growth.
Cost-Effectiveness and Affordability
Before SaaS, organizations needed to invest in hardware and maintenance to manage operations. The result? High maintenance fees to keep the on-premise hardware and network connections in check.
SaaS offers a cost-effective and affordable technology investment without significant upfront investments. Enterprises, large-scale organizations and online software solutions have made high-quality software accessible to businesses of all sizes.
The financial advantages of a subscription-based model allow businesses to allocate resources better. It also negates the need to invest in a team that handles all the hardware associated with on-premise software and services.
Scalability and Flexibility
SaaS enables companies to respond quickly to market changes or growth opportunities.
For example, when ChatGPT took the world by storm, SaaS companies began adopting AI features in their tools. It was a race to be the first to unleash AI features and gain a competitive advantage. During this phase, the teams might have needed to utilize certain SaaS tools or get upgrades to make these feature releases happen.
With subscription models, you can subscribe to SaaS tools whenever you want and cancel your subscription without long lock-in periods.
Ease of Implementation and Maintenance
SaaS applications can be deployed without complex installations or extensive IT support, unlike on-premise software. All you need to do is go to the SaaS tool’s site and subscribe to the software. Your team can use it immediately after going through their guide or getting a demo.
The cloud-based nature of SaaS tools doesn't need any on-premise infrastructure, reducing the burden on IT teams. Costly maintenance is also unnecessary, as any new feature updates or additions can be done via the cloud.
Remote Accessibility and Collaboration
More than 4.7 million people work remotely at least half the time in the United States. Hybrid work cultures have become the norm in many organizations across the world. In such a scenario, you need SaaS tools that make remote work possible and manageable.
For example, if your design files are stored on a physical storage drive, your design team will face difficulties sending files and revisions. With SaaS solutions, all the files will be on the cloud, and you can send and collaborate on these documents as long as you have an internet connection.
Many SaaS communication and collaboration tools allow you to create a culture of connection and belonging, even when remote working.
Frequent Updates and Continuous Improvement
Do you remember paying a fee for updates or improvements in your on-premise software? With SaaS tools, you can say goodbye to that. As SaaS works on the subscription model, SaaS businesses must convince subscribers to stay with them in the long run.
The business model leads to frequent updates and continuous improvement in the software - included in the subscription price. For example, take any stellar SaaS companies, like HubSpot, Ahrefs, or Trello. You can go to their blog and find content on recent updates and additions to the tool.
The customer wins in this situation. SaaS businesses need to keep optimizing their tool, and in turn, the customers get more benefits from these improvements.
While SaaS tools worked in silos before, now most of these tools offer integration capabilities. This reduces manual work, and organizations can utilize these integrations to build workflows that save time and improve efficiency.
For example, SaaS SEO tools like Semrush integrate with Google Search Console, Google Analytics, AI Writing Assistant, social platforms, SurferSEO and Monday.com to provide a seamless experience to their users and gain much more value from the platform.
It's made tech stacks more cohesive and efficient. Companies can now develop creative ways to structure their work and carry out daily responsibilities.
Enhanced Security and Compliance
Everybody wants their data to remain safe and confidential. They don’t want to lose their data and face exposure to theft or rounds of legal action. A data breach costs an average of $9.5 million, and cybercrime is predicted to cost $8 trillion. Organizations also have to deal with the after-effects of data loss, which can further burden valuable resources.
Reputable SaaS providers prioritize robust security measures to protect user data. They also comply with industry-specific regulations and certifications. Since data security is important in business decision-making, many organizations have switched to the enhanced security provided by SaaS.
Democratization of Advanced Technology
Advanced technologies like AI, machine learning and big data analytics have not yet reached the masses. But with SaaS tools utilizing this technology and providing it as features to their users, these technologies can reach a wider audience.
For example, Buffer introduced an AI assistant. It lets its users brainstorm ideas, write faster, repurpose posts, and get social media post suggestions.
The need to stay updated with the latest technologies and remain competitive within their industry has led many businesses to adopt SaaS.
SaaS Market Trends in 2024
There are so many trends shaping the SaaS industry. These trends influence the purchasing decisions of businesses, and you need to keep them in mind to stay relevant and competitive.
Here are our top trends for 2024.
Vertical-specific solutions describe SaaS tools for a specific industry, like financial services, insurance, healthcare or manufacturing. For example, a patient appointment scheduler that caters to a niche industry of healthcare.
The main benefits of offering these solutions are;
- Higher conversions
- Higher ROIs with targeted products
- A smaller and more reliable lead pool leads to lower CAC (Customer Acquisition Cost)
- Better upgrades
You need to understand your audience and buyer personas to offer vertical-specific SaaS tools. Knowing your industry-specific challenges helps you customize your offerings to provide relevant solutions.
AI and Machine Learning Integration
The global AI market is projected to reach $1.8 trillion by 2030. Machine learning is also growing simultaneously, increasing efficiency, personalization, and innovation.
For example, you don’t have to spend hours gathering data from different sources. You can ask AI and machine learning capabilities to do that for you. You can then work on the more important task of utilizing that data for your business.
By adopting these technologies, SaaS solutions can become more powerful. It has the potential to greatly impact automation, predictive analytics, and data-driven decision-making.
Security and Compliance Focus
Even if you have a great product with features your competitors don't have, people won't subscribe to your tool if you have not focused on security regulations. Nobody wants to risk crucial organizational data that can result in a loss of millions.
That’s why you’ll see many SaaS companies focusing on security as much as product development. Many SaaS websites discuss security front and center on the homepage.
Look at how Trello has a separate page that lets users know the different security measures, legal regulations and compliances they adhere to.
Collaboration and Communication Tools
Many SaaS tools have collaboration and communication capabilities. They're designed to help teams manage remote work and collaborate on one platform. These features remove the need for multiple tools and reduce the time wasted on miscommunication and confusion.
For example, instead of sharing designs via emails and getting comments, many design tools allow online collaboration where team members can leave their comments online and assign them as tasks.
With many organizations hiring people worldwide, these collaboration and communication tools can become a game-changer.
No-Code/Low-Code Development Platforms
Low-code or no-code development platforms are tools for people who don't have the time to write lengthy codes or don't know how to code. Instead, they use visual software development environments to drag and drop components, link them, and see the results.
There are many benefits of these platforms;
- Faster deployment
- Short and intuitive learning process
- No need for an extensive team
- Quick maintenance
- Ease of accessibility
- Increased analytical capacity
- Easier on the resources
Low-code/No-code is the future. SaaS companies are adopting these platforms for customizations and flexibility – a big win for their users.
Customer-Centric Design and User Experience
Did you know that 90% of users have stopped using an app because of poor performance? When users can find ten different project management tools with the same features, why would they stick to yours if you don’t have a customer-centric design?
SaaS companies need to prioritize user experience by following these best practices:
- Design for all platforms and devices
- Have a frictionless registration process
- Create a better information architecture
- Make things easy to find with search functionality
- Improve onboarding experience with tooltips and guides
- Engage and inform with dashboards
- Focus on loading speed
- Go ahead with a simple yet effective design
Data Analytics and Business Intelligence
Customers no longer want SaaS tools that provide data or help gather data. They want SaaS reports and charts that help them analyze data and make the most of business intelligence.
For example, if you subscribe to project management tools like Asana and SmartTask, you’ll get a plethora of reports like productivity and project performance. You can use them to optimize your projects for better performance.
Data helps businesses improve internal working and, in some cases, gain a competitive edge. By doubling down on data and business intelligence, you can provide a better SaaS experience to your subscribers.
Subscription Model Flexibility
Most SaaS companies offer various plans instead of following a fixed pricing model. The pricing plans vary depending on features, usage or downloads. It means businesses can choose a preferred plan and scale up or down whenever required according to their budget and growth plans.
It also helps in cost optimization. For example, you can subscribe to website design tools when revamping your website. Once you’re done, you can subscribe to a plan with limited features for website maintenance.
SaaS businesses must create flexible subscription plans that meet the customers’ requirements.
The Future of SaaS
The SaaS industry will see huge breakthroughs and technological advancements in the coming years.
It could be the emergence of new realities, changes in subscription models and products depending on evolving customer needs or market consolidation. We will see a growing need for API connections, more SaaS super apps, a focus on customer retention and churn, a data-as-a-service model, SaaS security as a priority, and much more in 2024.
The only way to stay updated with the changing trends and advancements is by being a part of SaaS communities. You can also turn to experts like MADX, who have vast digital expertise in helping SaaS companies navigate the evolving landscape and stay competitive. You can subscribe to our blog that covers everything related to SaaS SEO and business.
Navigating the Evolving Landscape
With the SaaS industry ready for expansion, you must know about the many new advancements. But, with so many daily responsibilities and tasks to manage, it's difficult for SaaS startups and small business owners to keep up.
The good news is that you can outsource your SaaS SEO and related activities to agencies like MADX with a team of experts to do the work for you. Here are some success stories of our SaaS clients.
Book your first call today!