1. technology and computing

The Ultimate Startup Guide
by
Part 2: The Game-Changing Trends in SaaS
May 2015
Prepared by Meagan Crawford, Internal Economist at PeoplePerHour
The Game-Changing Trends in SaaS
SaaS, or Software as a Service, is radically transforming conventional software tools for
micro/SMEs by diminishing transaction costs, increasing market flexibility and providing
cost effective outsourcing solutions to IT. Unlike any other time in history, micro/SMEs have
a level playing field with large enterprise and Fortune 500 companies through early adoption of a myriad of SaaS solutions, which are enabling massive efficiency gains in areas such
as: ERP, CRM, BI & HR solutions to name a few. Unlike conventional software models that
command large upfront costs in addition to an annual maintenance fee, SaaS is based on a
subscription model and is typically a fraction of a percent of the perpetual model. For
investors the next generation SaaS is commanding 5X compared to conventional software
companies that observed 1.5X, the market potential for SaaS platforms is enormous and
only just beginning to be tapped into.
What is SaaS?
SaaS, or Software as a Service, describes any cloud service where consumers are able to
access software applications over the internet. The applications are hosted in “the cloud”
and can be used for a wide range of tasks for both individuals and organisations. Google,
Twitter, Facebook and Flickr are all examples of SaaS, with users able to access the services
via any internet enabled device. –Interoute
The Key Benefits of SaaS:
Lower Costs:
Flexibility and Ease of Deployment:
Standardized solutions:
On-Demand Mobile Workforce:
SaaS applications level the playing field by providing micro/SMEs
tools that had been financially inaccessible up until recently. The
SaaS ecosystem is built on predictable monthly license fees
(subscription model), and usage based pricing models.
Improved management of key business areas: micro/SMEs who
have lean, undefined procedures have greater optionality through
standardized industry verticals i.e. accounting, sales tracking and
invoicing leading to greater operational management.
The on-demand SaaS model enables micro/SMEs the flexibility
to scale and deploy one business application at a time, while
testing the applicability to the business case, and the added
benefit of service termination with zero switching costs.
The rise in mobile supported SaaS platforms such as CRM
enables micro/SMEs to input and access sales data on-the-go,
encouraging users to stay remotely connected, increasing
productivity outputs.
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A breakdown of SaaS categories
used by PeoplePerHour users
The average number of platforms
used by PeoplePerHour users
Average SaaS platform spend by
PeoplePerHour users
27%
2
35.9%
£0
54.0%
CRM
26.2%
3
11.3%
£1-25
14.9%
Emailing
19.8%
4
8.9%
£50-100
8.9%
4.4%
5
7.3%
£100-250
4.0%
13.3%
6
2.0%
£250-500
2.4%
9.3%
7
2.0%
£500-750
3.6%
8
1.6%
£750-1000
1.6%
10 or more
6.1%
Marketing
Data Protection
Project Management
Office Suites
Human
Capital
Management
Application Complexity
WAVES OF SAAS PROGRESSION:
On-promise enterprise
apps e.g. CRM, ERP
Batch & transaction
processing
SaaS enterprise
apps
CRM
Batch & transaction
processing
Mainframe Computing
DARK AGES
ASP hosted
enterprise apps
Financial
Functionality
Personal Computer
Network Enterprise
Websites
1984
2001
Rich Internet Applications
2008
Evolutionary Timeline
Global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over
projected 2015 spending levels at 30% CAGR from 2013-2018 vs. 5% growth for overall
enterprise IT. –Goldman Sachs, 2014
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High-Growth SaaS Categories:
IT Management Applications:
1
IT is increasingly recognizing that cloud solutions can save money and allow workers to focus on what is
important to them in areas of core competency, business value, and differentiation.
2
ePurchasing/eProcurement, have greatly shifted over to SaaS in new product categories like services procurement, automated spend analysis, supplier network services, and supplier risk and performance management.
ERP & Supply Chain:
CRM & Productivity Applications:
3
Desktop and collaboration applications are well-suited for SaaS. Their broad user base of employees, customers,
and partners will make accessibility a must. Some CRM attributes that hinder SaaS adoption include a large
amount of data, high security, and varied maturity of product.
4
Business Intelligence:
5
6
BI solutions are moving rapidly towards full SaaS deployment
HR Software:
the user-friendliness and accessibility of SaaS allows for easier collaboration across all levels and departments,
eLearning is a rapidly scaling category.
Platform & Middleware Solutions:
Performance and degree of customization are limiting rapid scaling however, governance, risk and compliance,
application development, and storage have signs of slight movement toward SaaS
SaaS Most Highly Deployed Global Cloud Service by 2018
PaaS (21% CAGR)
24% CAGR
laaS (13% CAGR)
180
2013-2014
SaaS (33% CAGR)
160
13%
140
120
13%
100
80
60
40
20
0
15%
59%
44%
41%
2013
2014
2015
2016
2017
2018
Source: Cisco Globa Cloud, Index, 2013-2018
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The Game-Changers of SaaS
Zenefits is a free, cloud HR platform that completely automates the admin work behind
workers. Employers connect their payroll, health insurance and other HR systems (or set up
new ones) in seconds so they can manage it all online, in one beautiful dashboard. That’s
when the magic happens: Zenefits automates 95% of the HR administration work so what
used to take weeks—from payroll updates to employee on-boarding—now takes minutes.
Zenefits currently serves more than 10,000 small-and medium-sized businesses in 47 states,
across nearly every industry. Zenefits was co-founded by Parker Conrad and Laks Srini.
•
Zenefits has signed up more than 10,000 companies across 48 states, serving over 100,000
employees.
• Zenefits has an increasingly diverse customer base: In 2013, over 90 percent of customers
were from California and over 80 percent were technology companies. Today, more than half of
Zenefits’ business is outside California and over half is outside the tech sector.
• Zenefits closed more new business in just one month -- March 2015 -- than it did in the first
15 months of the company's life.
“There are millions of small businesses in the country that have been wasting countless hours
every year juggling multiple HR systems and outdated technology. We are not just eliminating
the paperwork; we are eliminating the actual work – making it easier for small businesses to
manage and grow. With 5 million small businesses in the US, the market opportunity is huge,
and we are moving quickly to go after it.”
Parker Conrad, Founder & CEO Zenefits
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Intercom is a customer communication platform, one place for an entire business to see and
talk to customers– inside their product, on their website, or by email. Intercom is integrated
with live product data, so messages can be triggered by customer behavior. Using a single
integrated platform for every customer interaction gives businesses a more complete view of
each customer, allowing for more personalized and contextual communications.
• Founded in 2011
• $31M raised
• 4k+ paying customers
• 100+ employees
• 1/3 of active users log in every work day
• Revenue grew 5x in 2014
Vend became the world’s first-ever cloud-based POS system for retail, and has continued to
lead the wave of second-generation SaaS companies in the years since. Vend is on the same
growth trajectory as the world’s most successful first generation cloud companies – like
Netsuite, Zendesk, and Salesforce.
•
Vend is now the most global SaaS company in the world with revenue spread equally
between key markets. No other company has this, which makes Vend very unique in the SaaS
and POS space.
•
Vend’s technology has been particularly suited to SMEs. It is inexpensive, well-designed, easy
to use and implement, and allows small business owners to do it all – taking sales, tracking
inventory, and running their entire business from a mobile device so they are no longer chained
to their store, or their clunky cash-register.
•
Vend has been in hyper-growth mode since it was founded in 2010, increasing its ARR by
100% each year. We now have seven offices and over 220 employees worldwide – and expect
this employment figure to double over the next year. Vend is on track to continue on a
high-growth trajectory for the next few years (and beyond), through increased funding and
investment, a customer base that has risen an average of 240% each year for the past three years
“As more retailers move their business to the cloud and take their brick & mortar stores online,
we will see increased demand for solutions that provide a one-stop shop for businesses in a
way that is flexible and can be tailored exactly to their needs. That could be either a platform
containing numerous capabilities and plug-and-play options, or an ecosystem of add-ons that
are easily integrated with each other. Companies that can provide SMEs with the ability to
build their own unique enterprise systems, in a cost-effective and simple way, will be the ones
who are most sought-after.”
-Vend
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Intercom 2014
Intercom 2014
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A special thanks to our contributors
Zenefits
Intercom.io
Vend
In addition to a special thanks to
Nat Burgess of Corum Group
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For Press Inquiries please contact:
Head of PR Aylish Jarvie
aylish@peopleperhour.com
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