All you Need to Know about the SaaS Industries
At a Glance
Technology has become an irreplaceable part of our society, right? The thorough incorporation of tech into our daily lives might be a source of worry for a few individuals. But since we’re not likely to experience a mutiny by robots who want to take over the world shortly, let’s focus more on the good! Well, it turns out the technology field is buzzing with activity right now! Starting with a new iteration of the World web to the growing presence of crypto and metaverse, the reality of what’s possible with technology is being constantly reworked. This article will focus on one such field of technology that has witnessed steady growth since its formation: the SaaS industries.
Definition of SaaS
Software-as-a-service can be described as a method of distributing applications online. In other words, it’s a model of software distribution wherein a fixed cloud provider hosts the application on the internet. These applications are often known as web-based software as there is no need to install them to make use of its service.
There is an option to utilize an external cloud provider for small and independent software vendors who do not have their cloud providers. Well-established, more prominent firms such as Microsoft do not have separate providers. The main role of the provider is to manage all aspects of the application, including access, security, and performance.
The architecture of SaaS applications is usually based on a multi-tenant system, and this means that a centralized provider shares a common infrastructure and code base with all users. Such a system allows the vendors to spend less time updating and innovating their code base and infrastructure.
Furthermore, multi-tenant architecture guarantees the possibility of obtaining a larger collection of resources that is then made available to a greater crowd without compromising on privacy and security.
What are the Advantages of SaaS industries?
From a user’s point of view, SaaS is beneficial as it lets you run applications without installing them. Therefore, you don’t have to worry about purchasing the software or updates! Also, the accessibility of the application is no longer an issue as it is available online. Any internet-enabled device can be used to access a SaaS app from any location.
SaaS is immensely advantageous for companies as well. Automatic updates reduce the workload of the in-house IT technicians. Customizable applications also help integrate various business apps that belong to a shared service provider.
Global Status of SaaS industries
Since its formation, the US has held the highest involvement in this industry. However, the overall growth of technology the world over has resulted in numerous other countries catching up with the fast pace of the US.
The European Union and Israel are two such regions focusing on developing the SaaS industries. They are growing at a highly accelerated rate that the US market is starting to lag.
Statistically, Europe has been developing unicorns at a faster rate as compared to the tech giant, the US. Well, not the one-horned magical fantasy creatures! Unicorns are private tech startups that are valued at over 1 billion dollars. While the US might still lead in the number of unicorns produced each year, the growth of these companies might not be as quick as they’d like it to be!
Countries in and around the European Union have also witnessed the rise of decacorns. Over last year, the valuation of all SaaS-related companies has doubled, increasing the number of decacorn companies.
SaaS industries have dramatically improved within the Indian context as well! In 2021, over 35+ companies recorded 20M dollars as their annual recurring revenue! According to the field experts, this fast-paced growth of the SaaS industries are likely to continue within the Indian tech market.
Trends to Watch Out for
As a still-evolving field, the entire SaaS industries are in a state of flux. Innovations and changes are happening the world over. Listed below are a few of the latest trends that are likely to guide growth!
1. Increasing occurrence of mega-rounds to drive capital in SaaS
Mega-round funding in startups is defined as the type of investments that involve large sums of money such as 100mm dollars. This form of large-scale funding is the leading cause of startups’ surge in capital investments.
According to the data collected from 2021, mega-rounds funding has positively created a significant shift on the revenue scale. In simpler terms, this funding is highly beneficial to the growth of startups.
2. A larger percentage of private funding
One of the significant trends that we’d all need to keep track of is the growing presence of privatized SaaS companies. Last year, there was a clear distinction between the flow of funding into the private and public companies, with private firms leading!
The main reason for such a demarcation is the larger profit margins achievable through privatized firms. The current growth rate proves that 2022 will also be a year of exponential improvement for the private sector.
3. IPOs grow in numbers
In a world with numerous private tech startups faring well, one would think the numerous public companies might reduce. However, contrary to this notion, the number of IPOs has also steadily increased over the last few years.
The increasing number of such public companies are also beneficial for economic reasons, and the valuations of that entire region seem to grow alongside the growth of IPOs.
4. Greater funding influx leads to a larger number of Unicorns.
The innovative energy created in this technological era is well reflect in the increasing number of startups today. The widespread acceptance of the products offered by these startups has immensely helped in its success.
Meanwhile, the free flow of funding has also helped these new companies establish themselves within the market scene. The UK, Israel, and France are the leading investors in the startup sector of tech.
In some cases, this funding has even helped companies be elevated to the status of unicorn companies. This growth stands as proof of the economic benefits of suitable investments.
5. Crypto and DeFi to make an appearance as well
The pandemic has changed life as we know it, and in most cases, we have only heard of unbearable losses brought in due to the lockdowns. But the one field that prospered during this period was the technological sector, and Crypto and Defi protocols have seen immense growth over the last few years.
Since the internet was first created, we have entered a new smart world! The rapid changes and updates have become an ever-present reality of our life.
SaaS industries are one of the forerunners of this fast-paced development. But since this is still just a growing field with lots more to explore, we are only beginning a significant era of innovation!
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