The Key trends to watch in SAAS

We recently launched a survey online trying to figure out the most crucial workhorse trends for Saas Software. The survey got about 15 topics ( Generative AI supported solutions, new pricing models, cloud based app, etc),  from which respondents would consider the three most important workhorse for solid profitable growth by this year.  

Here are the three winners among the 254 answers received:

1.      Embedded generative AI

2.      Outcome based and usage based pricing

3.      ESG reporting

For two runner ups:

4.      Ipaas

5.      cybersecuriity

 The Three Winners

 1. Embedded Generative AI

SaaS providers are increasingly integrating generative AI into their products to enhance user experience and efficiency. Generative AI enables the automatic creation of content, designs, and code, empowering users to accomplish tasks more effectively.

Example: Salesforce has been at the forefront of AI integration, enhancing its platform with capabilities such as natural language processing (NLP) and Einstein Copilot, a generative AI bot that assists users with complex tasks like answering customer inquiries and writing code. Workday is integrating AI features  generating job descriptions, analyzing contracts, writing content for employees, and generating code for Workday apps.

Expect further advancements in generative AI capabilities, enabling even more seamless integration into SaaS platforms and expanding the range of tasks that can be automated.

2. Outcome-Based and Usage-Based Pricing

 Traditional subscription-based pricing models are evolving towards outcome-based and usage-based models, where customers pay based on the value received or the extent of their usage.

This trend is not new: 46% of SaaS companies already have a UBP model. But the ternd is up with 15% are actively testing it, and 4% expect to test UBP in the next 6-12 months.

Example: Snowflake adopted a credit-based pricing model, where customers pay based on their actual usage of the platform.  Snowflake does it right with product revenue surging lately, well above analysts expectations.

Usage based pricing Usage-based pricing also acts as a  powerful net retention lever, as the approach is asymmetric - it has significantly more upside than downside and can drive revenue growth much higher than other approaches. Usage-based pricing, up to solution based pricing,  are expected to become more prevalent, driven by the proliferation of AI tools and the desire to align pricing with value delivered.

3. ESG

Environmental, Social, and Governance (ESG) reporting has become increasingly important for businesses, driven by regulatory requirements and stakeholder expectations. ESG data and reports are no longer simply nice to have—they’re a necessity. Many organizations are now required by law to publish ESG metrics. But even if this type of reporting isn’t required, a large percentage of consumers and investors want to be able to reference the data in order to evaluate the company.

SaaS providers are offering software solutions to streamline ESG data management and reporting processes.

The ESG software market is expected to continue growing rapidly as more organizations prioritize sustainability and transparency in their operations.

Runner-Up Trends

 4. Integration Platform as a Service (iPaaS)

The average company  runs  315 apps . iPaaS allows employees to harmoniously work between all of their apps without worrying about new integrations or lost data.

 iPaaS solutions facilitate the integration of various SaaS applications, allowing businesses to streamline workflows and improve efficiency. iPaaS platforms are expected to integrate with emerging technologies such as machine learning and AI, further enhancing their capabilities in data management and process automation.

5. Cybersecurity

 With the increasing prevalence of cyber threats, cybersecurity remains a critical concern for SaaS providers and users alike. Trends include proactive ransomware protection, cybersecurity automation, and investment in AI-driven security solutions.

Expect continued emphasis on cybersecurity measures, with a focus on enhancing security posture management and leveraging AI and ML for threat detection and response.