Impact of SaaS on US industries

By November 2, 2019 November 8th, 2021 No Comments

Cloud Based Applications – The secret SaaS to startup success

Most startups don’t fail due to lack of effort – they fail due to lack of preparation. A profitable venture is when you build something that people want to buy. The next 25 years will belong to IT, particularly SaaS (Software as a Service), which is about hosting your software on a public platform (called ‘cloud’).

The times they are a-Changin’

In earlier days, people would buy software on CD’s, every time there was a new feature addition, they had to buy a new CD. The payment of software was one-time, the other costs kept on changing which could be quite high at times. If the Computer crashed (especially hard disk) then data could be lost forever. So, people put in backup mechanisms, making copies on CD’s or external hard drives. Then, one had to upgrade their system from time to time, usually, it was to do with free space and RAM. For non-technical people, it was a hassle to manage all these tasks by themselves, impacting their productivity and reducing efficiency at work. Not just that, some new businesses found it tough to invest a huge amount into lifetime licenses, instead of giving that amount in monthly installments.

Now, that kind of software model has changed. Today is the era of Cloud-Based Applications, where Software is hosted on a powerful computer provided by the software developer, whose data is accessed using the Internet. The product creator is responsible for taking data backups and also puts regular updates to the software, usually no extra cost to the consumer. The pricing is subscription-based, i.e. pay-as-you-use. For B2C customers, apps like Uber charge consumers every time they use a service such as booking a dab. For B2B customers, apps like Zendesk charge every month or yearly, the pricing can vary as per the number of users in the system. Established companies like Adobe and Microsoft are gradually shifting to a recurring revenue model, the number of one-time licenses is steadily decreasing.

Description: Image result for cloud meme

Numbers, numbers everywhere

Using SaaS tools is now so popular, that every major industry is making use of them. A report by Gartner shows that the shifting of IT spending on cloud from their own premises is to be worth $216 billion by 2020. Vanson Bourne interviewed 460 senior decision makers and the findings stated that by moving to the cloud, businesses will grow by 19.63%. Another report by BetterCloud reveals that companies use an average of 16 SaaS based applications every day.

These stats are just a small fraction to state that in the coming time, more and more companies will be running purely on SaaS.

Impact of SaaS on American industries

SaaS-based startups are contributing significantly to the American economy. Below are some of the top ones to watch out for, that are impacting different kinds of industries in USA as well as rest of the world.

  • CompStak – This has comprehensive information on real estate for different kinds of stakeholders, such as brokers, property investors, middlemen, etc. It has raised more than $22 million in funding so far.
  • Wave – It’s a super useful tool for improving effectiveness of companies, by providing a free financial software for SME’s. The result is a faster and more efficient accounting process. More than $80 million have been raised in funding so far.
  • SkillJar – An easy to use Learning Management System for students and administrators, it is the fastest way for organizations to facilitate and train their users. More than $3.75 million have been raised in funding till date.
  • SignalPath – Having raised more than $18 in funding, it is aimed at improving the efficiency of clinical trial management.

These are just a few examples in-home, finance, education, and health industry. There are many more cases where SaaS has positively impacted every sector in North America, all for a good reason.

Getting on the cloud

While making a cloud-based application, developers need to invest in a server with apt architecture that would scale the app with an increase in users. Make sure your terms & conditions are mentioned in detail, and that user data is taken care of, in accordance with the government rules. For start you can launch a web-only version and as revenues start coming in, get their mobile apps made.

An advantage for developers is that apps with recurring revenues are a case of assured income, they know that every month they’ll be getting a certain amount. This offers a major benefit over IT services-based companies, where one always has to be on lookout for new leads, after project has been completed and delivered.

For end users, it assures that they can focus their energies on using the software and not on system upgrade or backups.

Get Funded by Vertical404 Capital

To conclude, the market has tremendous potential for cloud-based applications. If you’re a Black or Latinx entrepreneur, who has developed her/his own app and is looking for funding, reach out to us. We’re an Atlanta based pre-seed venture fund, focused on early stage SaaS startups, providing all the necessary mentoring and guidance to make them a success in the market. If you have any query, write them in the comments box below.

Antoine Woods

Antoine Woods

Antoine is the founder and Managing Partner at Vertical404. He is a strong advocate of entrepreneurship and has spent his career working with tech startups as an entrepreneur, developer, operator, and investor.