The changing SaaS market
We start this article with a little history lesson. SaaS has been around ever since the Internet existed and was first mentioned in a service description in 1985. Microsoft used the term SaaS as Software Plus Services as early as 2007. SaaS usage is expected to grow by 18% again in 2022, according to Gartner and there is no end in sight for further growth.
But what has changed? In the beginning around 1999 there was only Salesforce starting with their subscription and cloud based CRM software. All big players did not yet understand that this would be the model of the future. That changed really quick and started the era of the big SaaS platforms. This was followed by the era of industry-specific SaaS applications. These applications disrupted entire software sectors and became the market leader simply by changing the operating model to SaaS. New functions, constantly adapted to the market, became the new standard. But here the development did not stop. With about 25,000 SaaS companies worldwide today, even the last bastion in the software market fell and the era of SaaS tools began. Now every software company, no matter how small, has become a SaaS company. Programming without coding knowledge (No Code), Designer platform without Adobe Photoshop skills (Canvas), Agile retrospective without whiteboards (Miro), virtual Christmas parties (Hopin),… and so on. This will not stop until the last software niche has been converted to SaaS.
Dear CEO/CIO/CTO/CFO, if you thought you had survived the era of industry-specific SaaS (I’m not so sure about many companies here either), this shift in the SaaS market is already hurting you, and it won’t get any better in the future if you don’t act now.
A poor man´s software tools
Now let’s talk about how this Saas tool era is hurting your company. Everyone knows these poor man´s software tools. A department needs a small tool to solve a problem specific to their team. Central-IT has nothing in their toolbox (software standard catalog) to solve this specific business problem. The costs to purchase this software tool is a small amount for a few users and can be procured by their team leader without the central purchasing department. In the pre-SaaS era, there were no information security and data privacy requirements for these software tools as they were run on local resources (clients, private cloud). These tools and their data were protected like sheep safely in their meadow. In this context, the purchasing organization is expanding far beyond the boundaries of central purchasing. Software license contracts are scattered throughout the entire organization. This is not a problem that only exists because of SaaS. This problem is multiplied the larger and more international the company is. As a result, localized versions of software are also used, some of which solve the same business problems.
Now in the SaaS era, these sheep have got wings and are no longer sitting in their safe meadow but are running in the public cloud. Now, complicated data processing agreements and data privacy agreements are being added to those software license contracts. These are often simply signed without the knowledge of whether they violate local laws and policies.The discontinuation of the EU-US Privacy Shield after the Schrems II ruling has created additional requirements for the European area that are often not understood and violated.
Dear CEO/CIO/CTO/CFO as you can see those poor man´s software tools are hurting you a lot if you do not have processes in place to cover the purchase of them. Throw at least one rope to the sheep in the clouds to keep them hovering above your farm/company.
Hyperscaler as accomplice
Large hyperscaler such as Google and IBM have already recognized this trend in time and offer companies support and tools to become a SaaS company / Independent software vendor (ISV) themselves. They created departments like Googles Cloud ISV/SaaS Center of Excellence (CoE) or IBMs ISV/SaaS Center of Excellence. Such initiatives continue to pour oil on the fire and accelerate the transformation of the software market to a pure SaaS market.
How to heal the wounds of my company
In my previous article “Is your company a SaaS(aholic)” I already described 5 steps to overcome your SaaS problems. These does not only apply to SaaS platform era and SaaS industry specific era SaaS but also to SaaS tool era SaaS (SaaSception in the last sentence). The 5 steps are the following:
- Find out how bad it is (SaaS inventory)
- Create a cross-functional team of experts (SaaS Center of Excellence)
- Create a SaaS Governance
- Create a SaaS process
- Consider SaaS Management software
Dear CEO/CIO/CTO/CFO if you are struggling to implement those steps in your company since there is no industry standard guideline yet in place feel free to contact or consult us.
