The forecast for SaaS companies in 2016 is a sunny one. Why? Because the cloud has become the platform of choice and the de facto delivery model for more and more businesses, large and small. Although the cloud as we know it today has been around since the 2000’s, 2015 has proven to be a watershed year due to the widespread adoption of cloud-based business solutions and infrastructure for the enterprise, as outlined in this recent article from ZDNet.
SaaS products are generally more agile than on-premise solutions, along with being more cost-effective and easier to implement and support. As many different companies can attest, enduring failed implementations of on-premise solutions wastes considerable time, money and resources with nothing to show for it in the end but frustration, disenchantment and lost revenue.
Simply put, the SaaS model is more efficient. As businesses and users become accustomed to the greater speed and agility of SaaS solutions, not surprisingly, they come to prefer them.
Proof can be found in a 2013 Forrester study which showed that the median number of SaaS applications in use by enterprise businesses has been increasing year over year, some years by as much as 30%. The analysts at Gartner have estimated that enterprises will have spent nearly $150 billion on enterprise application software in 2015, much of this outlay toward modernizing, replacing, or extending software, using SaaS.
The ubiquity of SaaS isn’t the only thing that’s changed: the type of software being used in the cloud is also evolving. In a ten-country survey in 2014, Gartner found that SaaS solutions are no longer just for front-office salesforce automation, but for truly mission-critical projects that are core to the enterprise’s success.
Subscription billing solutions are some of these mission-critical solutions, so it shouldn’t be surprising that more and more companies are choosing cloud-based options. A report from Markets and Markets finds that the cloud-based billing market is expected to grow from $4.6 billion in 2015 to $14.6 billion by 2020. Adopters of these solutions may be enterprises either launching a new subscription business or replacing a homegrown subscription billing solution that doesn’t meet their needs.
Many legacy, bespoke solutions by their nature are not very flexible, scalable or adaptable. These solutions may also require expending considerable developer resources—often expensive and scarce—to develop, implement, and maintain, often at the expense of using these resources to meet customers’ needs. With SaaS solutions, responsibilities for development, maintenance and support are borne by the software vendor, leaving the merchant free to devote their development and other resources to serving their customers and their company mission.