It's no surprise that SaaS has become the new development standard; the cloud has dramatically lowered costs to develop and distribute software while increasing user accessibility.
So what’s next for SaaS?
Working in the accounting technology vertical (as well as the wider software industry), I've noticed three exciting developments in Saas that are making life better for both customers and developers of business to business (B2B) software.
1. Software companies are increasingly focusing their solutions on the end user.
The significantly lower cost of developing and distributing cloud-based software allows startups to build niche solutions for customers who have not yet been reached. There used to be a gap in software solutions for midsize companies (typically defined as those making between $50 million and $1 billion in annual revenue). It was a classic Goldilocks conundrum: You could either use accounting software designed for small businesses (like QuickBooks) or you could go to a big, expensive ERP firm (like SAP). Nothing was ever "just right."
The rigid structure of legacy software left little room for flexibility. There was no extra room at the table; you needed to replace the whole kitchen in order to buy a new stove. The majority of companies stuck in between enterprise or small business were forced to implement these tools at a considerable cost — in terms of both money and time.
Thanks to SaaS, we now have flexible solutions for companies in the middle — Oracle NetSuite and Sage Intacct, for example — that integrate with a variety of B2B software applications for all sorts of business needs. (Full disclosure: FloQast is a partner of NetSuite and Intacct.)
2. 'Best of breed' solutions are increasingly winning out against 'all in one' suites.
The proliferation of API integrations is great news for midsized businesses, which typically prefer to select “best of breed” applications that fit their needs rather than classic “all in one” suites that do a bit of everything, but sometimes not particularly well.
That bodes well for developers of specialized solutions, and analysts think there will be an increased focus on SaaS apps that seamlessly integrate with the tools that teams already use.
In the accounting and finance space, this trend is allowing forward-thinking controllers and CFOs to build a customized “tech stack” for their finance department.
I have worked with people who implement cloud ERP systems that then go on to purchase financial planning and analysis (FP&A) software plus close management software, which they can then integrate with their ERP via pre-built API connectors.
3. Developers are putting ever greater emphasis on service and support.
SaaS has reinvented what it means to be a business by turning products into subscriptions. SaaS companies are emphasizing service because subscription contracts mean an easier opt-out when your term is up — eliminating what’s known as vendor lock-in. When it’s easy to sign up for a service and easy to implement, it's just as easy to turn it off if you don't like it. This means you have to have a good product that really delivers value, and you've got to have great support so that customers don't have a negative experience.
Converting into a subscription guarantees future income while providing greater value to the customer. That means software companies are starting to look a lot like service businesses, and that's great for end users. It also means that companies will need to invest more money and resources into customer success — and most importantly, they'll need to start looking more like their customers. The biggest risk for a SaaS company is their churn rate; if you've got high churn, you won't survive.
I expect to see more developers start to look like their customers in terms of background and domain expertise. Jeff Bezos, founder and CEO of Amazon, put it best when he said the main reason for Amazon's success is their "obsessive compulsive focus on the customer as opposed to obsession over the competitor."
"The missionary is building the product and building the service because they love the customer, because they love the product, because they love the service," he said in 2015. "The mercenary is building the product or service so that they can flip the company and make money."
I believe that understanding the way your customers think is the best way to provide high-quality service. SaaS providers are getting smart in arming their teams with people that think like their customers. Having those evangelists who’ve been in the trenches as part of the team is a continuous investment, especially as the working knowledge of software use cases and paint points evolve. But I believe it will pay off. As Bezos said in 2018 at The Economic Club of Washington, D.C.'s 32nd anniversary, "it's usually the missionaries who make the most money."
