The SaaS (Software as a Service) market is one of the fastest growing and most versatile in the tech world. Offering software as a cloud-based license and delivery model has become the cutting edge in terms of software distribution. The prime candidate for SaaS models are software platforms that require high up-front investments for small to mid-sized firms and which require consistent updates. Platforms such as enterprise resource planning (ERP), CAD software, virtualization, engineering software, and development software are perfect fields for SaaS application. The drawback of the SaaS model is that the software itself is on the cloud and is accessed remotely, so it is not suitable for applications that require very fast response times. Because of the versatility, simplicity, and homogeny that SaaS presents for the software market, this field has been growing at an extremely rapid pace.
For those using SaaS, the market place has been open to small scale innovation and distribution, which has allowed for interesting market place dynamics. However, the latest figures show a massive shift in this trend toward large scale providers (sometimes referred to as ‘hyperscale’). Between 2012 and 2017, the marketplace has become more and more dominated by these hyperscale market players (12% increase, now nearing 60%). This trend has left many of the smaller players behind considering the scale of infrastructure and the complexity of rapid delivery methodology. This market trend is not only in the SaaS application field, but also in PaaS and IaaS (platform as a service and Infrastructure as a Service) marketplaces on an even larger scale. The nature of these service based platforms lends themselves to this market shift, and because of the obvious profit margins that can be realized in these spaces, large scale companies are seeking to continue gathering market share at a rapid pace.
While this trend is disturbing for many, it does present a unique opportunity for the small business. While there are many SaaS applications with limited availability, the large player market movement is now allowing for small scale competitors to offer some of these services at discounted rates. Companies can now take advantage of the shift in market forces, and with a little research, potentially find SaaS replacements with excellent customer service and retention at a fraction of the rates offered by larger competitors. Unlike IaaS and PaaS systems, SaaS companies can still provide excellent service with smaller infrastructure models while still providing rapid delivery. These opportunities will continue to arise as the innovation in these fields continues.
Regardless of what sector these services are utilized, the reality is that the hyper-scale players will continue to dominate the market. The downsides of large player dominance in innovation and competition are evident, but if there’s one thing the last 30 years has taught us in the tech industry, the only constant is change. Innovation and competition will continue, inevitably providing excellent alternatives for companies willing to do the extra research and market awareness.