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How Software as a Service (SaaS) Helps Digitalize the World

SaaS companies remain at the forefront of global digital transformation. In the long-term, however, only the most resilient and profitable companies will be able to reap the benefits of the potential of the SaaS market. Whether you use, invest, or run a SaaS company, the wise selection of a sub-sector and business model resilience is paramount amid today’s increasingly tougher economic conditions. 

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The economic potential to be unleashed by SaaS adoption is phenomenal: The market for software as a service is expected to grow from $130 billion in 2021 to over $710 billion in 2028, at a compound annual growth rate of 27.5%, reports Fortune Business Insights.

SaaS market growth is primarily driven by the ever-increasing adoption of public cloud services across businesses that are shifting towards SaaS as they maintain their own server infrastructure run by expensive and bulky in-house software. Thus, SaaS helps companies to be more flexible and productive in their day-to-day operations.  

Source: 2020 State of SaaSOps Report

SaaS is not limited to cloud services, however. Aside from well-known names such as Microsoft Azure, Amazon AWS, and Google Cloud, there’s a plethora of niche SaaS companies and areas where they’re pushing the digital revolution forward.

From software development automation to supply chain management

A little-known fact about the SaaS market is that there are more than 25,000 SaaS companies around the world, according to Statista. Businesses use SaaS for sales management, team communication, software development, and for many other purposes. 

Nonetheless, despite the bright outlook for the SaaS market, not all SaaS companies are equally insulated from economic downturns. Thus, we at Prospective Technologies Ventures (PTV) prefer to focus on firms with steady revenue and strong unit economics. For example, we’d like to highlight two SaaS sub-sectors that we find the most appealing: software for IT teams, e.g. development automation, and supply chain and manufacturing automation.

According to a Gartner survey, over 61% of supply chain managers believe technology to be a source of competitive advantage. As one of the key forms of digital transformation, SaaS can assist in making supply chains simpler, more reliable, and resilient.

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Supply chain SaaS are used in transportation management, inventory and warehouse management, sourcing and procurement management, as well as order management, demand and operations planning. Even though this area of SaaS application hasn’t yet been hyped, the global SaaS-based supply chain management (SCM) market reached $6 billion in 2021, and may more than double to $14.5 billion by 2027, according to IMARC Group. 

New lucrative opportunities

Another compelling use for SaaS is IT development automation. For instance, the SaaS company testRigor enhances the software development process by helping software testers to automate programming code. This allows them to test up to 15x faster (as per company), thereby saving up to 99.5% of time spent on this.  

SaaS companies remain at the forefront of global digital transformation. In the long-term, however, only the most resilient and profitable companies will be able to reap the benefits of the potential of the SaaS market. Whether you use, invest, or run a SaaS company, the wise selection of a sub-sector and business model resilience is paramount amid today’s increasingly tougher economic conditions. 

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(Featured image by ThisIsEngineering via Pexels)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

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Seasoned investor Aleksandr Kuraksin is a co-founder and partner at Prospective Technologies Ventures (PTV), a VC fund focusing on automation of supply chain and software for IT teams. He enjoyed a long and successful career in investment banking, developing complex debt instruments and structured products. Later Kuraksin spent some time as an angel investor and advisor to startups. In the beginning of 2022, he co-founded PTV to help businesses improve the efficiency of various manufacturing processes.