Unbundling in an ecosystem: The rise of micro-SaaS

SaaS Article - Unbundling in an ecosystem: The rise of micro-SaaS (source: SaaS Industry)
At a Glance

Micro-SaaS offerings are a noteworthy trend in the SaaS ecosystem today. Reports state that its surge has made developing and building up a SaaS company a seemingly more accessible achievement today.

The growth of SaaS is not new to the world. Within the crowded SaaS ecosystem, new players constantly emerge. Be it a company, a product, an innovation, they eventually lead to trends. An article by Forbes on the cloud-led evolution enunciates that SaaS enterprises need to evolve with the advancement of technology and ideas to remain ahead of the curve. It stresses that innovation, deep specialization and affordability are the main drivers for the continuous evolution of the SaaS industry. 

Today, SaaS offerings can address specific business functions (customer relationship management SaaS, Identity Access Management (IAM) SaaS, etc.), catering to the horizontal SaaS business model and their operations. Otherwise, they can tailor the needs of specific industries, which forms the crux of the vertical SaaS models today. Similar to these models, micro-SaaS is on the rise today. A report from Datapine enunciating the various trends shaping the SaaS ecosystem in 2021 stresses the need for SaaS companies to find new ways to innovate, offer value and connect with new prospects, which has paved the way for what it cites as SaaS unbundling

Jonathan Tarud, co-founder and CEO of Koombea, states that the idea of “bigger is better” need not always work for SaaS today. For instance, small businesses using software would only require a small set of specific tasks to be addressed by their solutions and would not prefer going through excess features. Additionally, with the increasing customer demands for particular solutions, unbundling becomes a major equation for SaaS. 

Robert Kazmi, chief revenue officer of Koombea, elucidates how with the increasing unbundling, large and full-featured SaaS companies have slipped out of the interest pouch of some as not all the features and the full extent of services offered by them are required. Smaller micro SaaS businesses can offer a service more focused on a particular set of needs.

Smaller teams run Micro-SaaS businesses, typically one or more founders and their products are usually complementary add-ons to existing platforms or developments, created to improve a missing feature or enhance an existing SaaS product. Tyler Tringas, founder of General Partner and a former lead developer at Storemapper, sums up the term as a “niche market” target.

The aforementioned Datapine report states that it expects to see more micro-SaaS innovations emerge from the woodwork in the coming years. According to Koombea, as opposed to other businesses, many micro SaaS businesses operate with small costs and a narrow focus with a small yet dedicated user base and not much funding from outside. This makes a micro SaaS business very attractive from a team perspective.

Micro SaaS businesses have the ability to be location-independent, have low overheads, high margins, and relatively low risk for the company. With no outside funding, many have bootstrapped from next to nothing to grow a viable business. Part of their success lies in the fact that they operate in a focused market, with minimal resources, and with predictable recurring revenue

Robert Kazmi, chief revenue officer of Koombea

Additionally, micro-SaaS solutions offer benefits to both service providers and end-users. Reports state that micro-SaaS requires lesser effort, resources and time to build due to its small and focused functionality. They allow seamless upgrades inside the browser. Additionally, concerning support, which usually consumes time and cost, it becomes easier to manage it in a niche-focused market that micro-SaaS addresses. The builders can effectively address problems by themselves or with the help of a very small team.

A Unoia tech gives examples of various areas where micro-Saas can make an impact. Some among them include – employee learning, with software like Grovo that can provide a less time-consuming micro-learning approach; journaling, with software like Plunkt; or innovative ones like TheCookBook, allowing customers, manage and organize recipes for cooking. 

It will be noteworthy to observe how the microSaaS trends play out in the future. Articles and opinions suggest that MicroSaaS will rule, continuing to grow in revenue as tools and abstractions get better. At the current rate of growth, they might eventually turn venture backable, cutting down the distinction between MicroSaaS and SaaS. It would take some more time to witness the reality, however.

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