The Rise and Rise of Saas companies
Gone are the days when graduate schemes and linear career paths were the only things awaiting young people entering the job market.
Raised on technology in a world that is becoming more and more interconnected and shaken up by globalisation, millennials are crossing the threshold of the workplace to find it changing at an alarming rate. According to a recent Oxford study, all the developed nations on earth will see job loss rates of up to 47% within the next 25 years. It has never been more important that you ensure that you stay ahead of the curve in your chosen career, and this is why SaaS continues to increase in popularity, with no signs of slowing down any time soon.
Innovative and adaptable SaaS solutions are pervading every single job sector. Brian Rich, Managing Partner and Co-Founder of Catalyst Investors, believes that in the future “SaaS will be pervasive and there won’t really be a SaaS industry per se, because all software will be delivered in this fashion”. With legacy software vendors now adopting this model, it’s no surprise that the SaaS market is poised to surpass $112.8 billion by 2019 according to IDC research, and the overall market will reach $164.29 billion by 2022, according to Transpacency Market Research (TMR).
A Brief History of SaaS
SaaS, in the most basic terms, is a business model with a specific method of software delivery, whereby customers pay to use software hosted on a remote computer. It is a broad term, and is often used interchangeably with “cloud computing”. It traces its history back to the 1960s, when computers were immense and expensive. As a cost-effective solution to gain access to modern computer systems, numerous “dumb” terminals (keyboards and monitors without CPUs) were networked to a mainframe where all the data resided. This is the earliest form of connecting computers together, now known simply as “the internet”.
The late 1980s and early 1990s saw a dramatic decrease in computer cost, allowing employees to afford to have a computer at their desk. The SaaS industry adapted to this shift, and the early hub-and-spoke system was replaced by Local Area Networks (LANs), an in-house system to which employees connected in order to access company applications and business data kept on a central server. CRM (Customer Relationship Management), Payroll and Accounting Services, all with simple, text-based interfaces, quickly came to be products delivered over the SaaS system.
Bloatware and SaaS’s surge in popularity
Bloatware was surprisingly the phenomenon that led to a surge in popularity in SaaS in the mid-1990s, when software developers bundled bloatware (extra programs you don’t specifically need) into their software to take advantage of the growing numbers of office workers having their own computers.
Bloatware took up previous hard drive space, and was sold at a premium at the time, a 15MB hard drive being priced at $2495 USD. SaaS therefore became a necessity, as businesses were forced to get round the high price of physical hard drive space by storing all applications and business data on a central hub.
The SaaS industry’s triumph in the late 1990s over the Application Service Provider (ASP) industry (whereby companies stored data “off-site” and then accessed it over the Internet) cemented its status as the future of software services. In contrast to ASP, SaaS took full advantage of modern technological features such as virtualisation and cloud-based scalability, operating a multi-tenant infrastructure model (unlike ASP, whose vendors often hosted multiple instances of third-party, client-server applications).
The first companies founded specifically to provide SaaS services emerged in the late 1990s, with the founding by three entrepreneurs of Salesforce in 1999, the first SaaS Company built from scratch to achieve record growth, and Concur, which many consider the first SaaS Company, leading the way. It is now a business model that has been adopted by companies that offer incredibly useful program solutions to everyday small business tasks are popping up all over the place.
SaaS is now significantly outpacing all traditional forms of software product delivery, and according to IDC, it is growing nearly five times faster than the traditional software market. Here you can find more information on the SaaS industry’s history.
The exciting future ahead
The future is now blindingly bright for the SaaS industry, and far closer than the market is prepared for. Gartner has predicted that the public cloud services market will grow 18% this year to total $246.8 billion (£198.1bn), and this trend will only increase when the SaaS industry integrates and employs advances in Robotics, visualisation and, most importantly, Artificial Intelligence; building on the recent breakthroughs that have already been made by Google. The future of SaaS lies in automation, and will soon be able to provide users to data fetched automatically and converted into a relevant, readable format. Led by the Healthcare and Energy sectors, others are catching up fast. SaaS is forecast to bring huge disruption to the financial services and retail industries over the coming years. Of potentially more significance to SaaS’s surge in growth in the near future is the involvement of legacy software vendors who, seeing their on-premise enterprise businesses in jeopardy, are starting to transform their businesses into SaaS. In 2016, BVP recorded that one-fourth of the public cloud market acquisition involved legacy software vendors, noting that “[They are] finally admitting cloud is here to stay and are buying their way to catch up”. One thing is for sure: this is an industry that will only continue to become more sophisticated and grow further, and if you want to get in on the action here is some information to get you started.
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