10 things top SaaS companies need to watch out for in 2020

The untapped potential is still enormous. This might read like unbridled optimism, but it's more. There's still a lot of pain points in SaaS that are unsolved, and businesses will pay good money to have their problems solved.

SaaS itself is trending. Search queries for "SaaS" are consistently on the rise. SaaS industry growth doesn't look like it'll slow anytime soon. The SaaS market size is expected to cross $150 billion in 2020. With this growth comes a few core trends: expansion in primed markets, a striving for simplicity in mature markets overwhelmed with their current SaaS solutions, and innovation in untapped markets.

As a SaaS development firm, our team has insight into SaaS app usage across industries and functions, giving us an incredible insight on the impact of SaaS proliferation on companies of every size and on analyzing data on a sample of firms of all sizes and reviewing consumer needs below are the key SaaS market trends for 2020:

1.Analytics is taking center stage

Analytics and data over the last few years have been a growing focus point in SaaS. Companies are investing more and more on SaaS applications for business intelligence. User spending on such apps is bound to grow. More businesses in 2020 are likely to adopt specialized analytics tools. Now is the time for companies that have long battled with trusting the data at their fingertips to embrace new SaaS solutions that deliver reliable numbers.

2.We'll see more vertical-specific SaaS applications crop up to serve particular pain points

Vertical-specific SaaS companies tend to see growth faster than horizontal companies too. And they form the largest portion of the overall SaaS market. A vertical niche refers to a specific type of business (such as for dental offices or appointment software), while a horizontal one refers to a specific use case catering to every type of business (such as email marketing software). Employees and business owners alike enjoy using tools that were designed specifically for the needs of their industry.

3.Freemium is here to stay

This refers to a strategy used by various SaaS companies to reduce one of the main barriers to adoption: budget. We're all now ardent supporters of Freemium but were taken aback to discover that, on average, companies of every size are using 3x more free apps than paid apps. In spite of the debate about its effectiveness for B2B, Freemium clearly is still a great user acquisition strategy for SaaS businesses. The best of them have figured out how to remain sticky and traverse upgrade paths based on value over time.

4.For the sake of simplicity, All-in-one is back in trend

A couple of years back, nobody wanted the jack of all trades, master of none product anymore. They were all hunting for multiple best-in-breed apps that one could integrate together. But "all in one" is a real benefit in oversaturated markets. Simplicity is a huge win, especially for small businesses. When so many SaaS companies are still working on building one tool that integrates with others, smart SaaS founders will continue to explore the value of "all in one," particularly for small businesses.

5.Best-in-breed applications aren't going anywhere

A best-in-breed application isn't offering you a large platform that caters to endless use cases. When it comes to certain SaaS products that are complicated and enormously expensive to build, we'll see more firms emerge with the aim of working far more efficiently than legacy ones, but for one particular core use case.

6.There is a real need for API connections.

Whether you're an "all in one" or "best of breed" SaaS company, there are going to be plenty of reasons for integrations. As companies strive for better data utilization and management and efficiency, SaaS products will need to prioritize APIs and integrations, or they will risk losing users to competitors who do.

7.SaaS as a platform for buying services

Services are a reliable and great business model. Even more entrepreneurs in 2020 will innovate new ways to build scalable service companies inside easy-to-use SaaS platforms.

8.SaaS is not just for the big guys anymore

There are many small and medium-sized SaaS companies that are bootstrapped and profitable. Even more entrepreneurs in 2020 will realize that a SaaS company doesn't have to have a VC-backing or billion-dollar valuation in order to be a great business.

9.Overdue B2B categories and niches are bound to be disrupted

You know that phase where a painful process is discovered, and a multitude of companies emerge to fix it? That's a trend that's never going away. The hottest SaaS opportunities are ones that serve industries and businesses that are long overdue for innovation. In the coming years, a lot of the top opportunities for disruption are in property management software, business travel software, real estate software, KPI and OKR tracking, and other overly manual, underserved industries such as medical and early education.

10.Machine learning will find increasingly more practical applications

While plenty of small business owners and B2B employees are utilizing SaaS solutions at work, very few are using SaaS products powered by machine learning and AI. Competent entrepreneurs will create more products that rely on AI and machine learning for security and fraud detection, marketing personalization, healthcare automation, and more by taking advantage of the application gap.

11.Tighter security

There is real pressure to tighten up privacy. Users are expecting SaaS providers to abide by their privacy preferences and keep their data secure. They will face extreme backlash on social media and review sites if SaaS brands ignore that.

The trends will evolve as the SaaS market grows. The continuous shift to the Cloud is happening as we speak. However, the impact of machine learning on productivity and new growth is not yet fleshed out.

SaaS companies are getting better every day at managing resources for growth. We have seen increased productivity and greater efficiency in the use of capital and labor over the years. Despite modest economic growth projections, we expect growth rates to continue to be strong for SaaS companies in 2020.

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