What type of business is SaaS?

Software as a Service (SaaS) is a new business model disrupting the industry in recent years. It is seeing significant growth as more people do tasks remotely on their phones and gadgets. You probably use one regularly without even knowing it!

There are plenty of different types of SaaS, and depending on the service it offers, it can either be a B2B (business-to-business) or B2C (business-to-customer) company. For example, Netflix is a SaaS company; so are most of the apps you’re using for work, like Slack, Asana, or Dropbox.

What Is SaaS?

A SaaS business hosts software on a cloud infrastructure (i.e., online) to provide users with externally managed, owned, and delivered services, eliminating the need for installing traditional software. Instead, users can access SaaS products through any device connected to the Internet with a web browser.

Users can activate the software by paying a fee, through a licensing service, or by subscribing to a plan. Typically, a subscription plan’s cost depends on the technical support your customers will be getting, the number of users accessing the software, and how much data will have to be stored on the company’s servers.

Benefits of creating SaaS

In general, the Software-as-a-Service model entails many quite convincing benefits for business owners thinking about creating such services themselves:

  • Cost reduction. You don’t have to invest vast sums of money to create an IT infrastructure. The software is usually located in a shared environment, which means that licensing costs are much lower compared to a traditional business model.
  • Regular income. Thanks to a recurring membership plan SaaS typically offers customers, you’ll have a steady and predictable income stream. Your customers only rent your software, not own it.
  • Customer retention and loyalty. This type of membership will, in turn, cause your clients to become more loyal, especially if you offer services integral to their lives or businesses.
  • Investors. Revenue stability will also attract investors wanting to pour some funds into your business, as well as retain the existing partners.
  • Scalability. By being hosted on a cloud, your clients can easily scale their applications up or down without you needing to get access to another server to obtain more resources.

The Rise of SaaS

Over the past decade, the SaaS market size has grown from 13 billion U.S. dollars in 2010 to over 170 billion as of 2022. That’s more than 500% growth. What’s more, the market is expected to reach over 700 billion by 2028. The latest pandemic has only served as a catalyst for such cloud service uptake thanks to a new type of technological reality it caused.

With its remarkable growth, it’s no wonder that so many new players are trying to get into the SaaS market. But a large percentage of these startups don’t see the light of day. The reason why most SaaS companies fail is due to a combination of market problems (e.g., the fintech market size), business model failure, poor management, financial issues, and bad products.

If you have an idea and are thinking about entering the industry, an excellent way to ensure your success is to know how to design a SaaS product. If you’re unfamiliar with the space, hiring a user experience and design (UI/UX) development agency like Merge can get you a beautifully crafted, high-functioning, scalable product.

Types of SaaS

There are several different types of SaaS, which means that you can explore a thousand ideas that you want to bring to life. Here are some examples to get you inspired.

SaaS types
SaaS types

Content Management System

A content management system (CMS) is software, or a toolkit, designed to help users create and manage a website or app. It lets you create, manage, upload, and modify content without knowing how to code. Examples include WordPress and HubSpot’s CMS Hub.

Typically, content management systems pride themselves on being extremely user-friendly, low maintenance, scalable, SEO-friendly, and almost always offering clients a quick deployment of their projects.

Customer Relationship Management

A customer relationship management (CRM) software, such as Zendesk or Salesforce, allows you to manage customer information and track sales through a pipeline. Sales and marketing teams often use these products.

Modern CRM systems can automate repetitive tasks, forecast sales, manage customer segmentation, create reports, protect your customer’s data, scale your company’s internal processes, and even integrate with other tools to expand this list of features even more.

Project Management

Company teams use project management software to track their projects. Project managers find value in the software because it includes assignments, progress tracking, and goal-setting features. Basecamp, Trello, and JIRA are examples of these.

Some tools, for example, can show you your detailed progress and project overview while enabling you to track each team member’s contribution. Others are focused more on helping teams retain high productivity. All of the tools have synchronization available in real time.

Web Hosting and E-commerce

Web hosting and e-commerce software, like Wix and Shopify, allow business owners to create websites and e-commerce shops simply (i.e., without knowing how to develop online platforms). These also often double as CMS, allowing you to manage content on the site.

Shopify, for example, makes online purchases for your clients as easy as ever. You can add different discounts and coupons to further improve your customers’ shopping experience. E-commerce tools make content adjustments and progress tracking completely hassle-free.

Human Resources

Some SaaS companies offer products that assist in human resources management, including payroll management, hours tracking, benefits administration, etc. Some greats ones include BambooHR and Deputy.

With human resources SaaS tools, your HR department can better retain valuable employees while keeping track of those not catching up with the workload. Anything that has to do with work schedules can be automated to free some time for more critical and personal tasks.

Data Management

Data management SaaS companies offer features such as storage, as you see in Dropbox, Microsoft OneDrive, and Google Drive. Other data management software includes such crucial for business features as data analytics, database management, modeling and visualization tools, etc.

Some tools also allow for automating administrative tasks pertaining to data management, such as cloud configuration, business rules evaluation, data mapping, backups, and recoveries.

Communication

Communication software, which includes the likes of Slack and Discord, lets people connect with others more seamlessly. You can communicate in channels, teams, or via direct messages, and these often have features that help make your conversations richer.

Both Slack and Zoom, another SaaS tool for remote communication and video conferencing, have experienced unprecedented growth in the past few years, particularly after the pandemic has left pretty much the whole world unable to meet IRL for a while.

Get into SaaS Today

Do you have a SaaS idea that you think could solve a problem people face day-to-day? The next step to turning that idea into reality is to consult a UI/UX design and development agency like Merge to kickstart the process of making your product. You might end up with a winning effort that makes people's lives better!

Serhii Hyliuk

Head of Growth

Head of Growth and Customer Success. I'm interested in design, new tech, fashion, exploring new places and languages. My mission is to make our clients happy.

Head of Growth and Customer Success. I'm interested in design, new tech, fashion, exploring new places and languages. My mission is to make our clients happy.

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