by Chris Cowan
The definition of SaaS is expanding and the very nature of the beast is changing with new disruptors coming in and running rings around established vendors. Is it time for a SaaS rebrand? We sat down (virtually) with Phil Wainewright of diginomica, the authority on all things cloud computing, to shine a spotlight on SaaS.
Q: One the most exciting aspects of SaaS is that it’s a constantly evolving market. How important is the inclusion of AI? Does it give a market lead and advantage to early adopters?
Keeping up with SaaS has certainly been keeping me busy, and it’s not slowing down any time soon, that’s for sure! AI is an important new pace setter, although not the only one.
AI does tap into a big advantage of SaaS that people were talking about right from the beginning. SaaS providers have an overview of what all their customers are doing, because they’re all running on the same software in the cloud. With AI, the more data you can work with, the better.
So take a vendor in a sector like spend management, such as Coupa, which has more than a decade’s worth of spend data across its entire customer base. Now Coupa is using AI to look at all that data in aggregate and finding trends and patterns to help guide its customers. The key here is having a huge volume of data and being able to analyze it to find trends and make useful suggestions or predictions.
A really interesting area that’s opening up now is in machine transcription of voice conversations or video meetings. There’s a new class of vendors who are using AI to monitor that behaviour, for example listening in on sales calls, and prompting the agent with background information or suggestions about what to say next. Gordon Ritter, a VC who was one of first investors in Salesforce, believes this whole area of AI and humans learning from each other could be one of the biggest new trends in SaaS.
Q: What opportunities exist for newcomers to disrupt the SaaS market? How are incumbents likely to respond?
We are only just entering a new wave of SaaS, in which all bets are off. The incumbents – Salesforce, ServiceNow, Workday and so on – have been around 15-20 years. Like all incumbents, they will respond by protecting their turf, which means the disruptors will be able to run rings round them. This is how it always goes when technology evolves this fast.
The opportunities lie along two dimensions. The first is the ability to build new software using components and services from other providers. Today’s disruptors build as little as possible by themselves – they know how to mine the network for resources. It’s never been easier to build a SaaS offering, whether using cloud platforms or serverless resources from the likes of AWS, Google Cloud and Microsoft Azure, or building on vendor platforms such as Salesforce or Slack.
The second dimension is finding new digital alternatives to established processes. Find a new way to connect things that could never be connected before, or use digital to do something instantly that used to take hours, days or weeks. For a real category-killer, do both at the same time.
Q: You say the goal of digital transformation should be the ‘frictionless enterprise’. SaaS is key here. What are the smartest next steps organisations should take so they can achieve that goal?
Digital transformation is much more than a technology upgrade. Today’s connected digital tech enables you to do things differently – to rethink how business operates and remove all the friction of the pre-digital world, with all its functional silos and cumbersome, paper-based processes. This means a radical overhaul for most organisations, both in how they interact externally – with customers, suppliers and so on – and in their internal operations. They can learn a lot from the SaaS industry.
One of the game-changing ingredients of the SaaS model is the continuous digital connection with customers. SaaS vendors stay engaged with their customers, monitor how they use their products, and improve those products over time as they learn more about what customer success looks like. Today, every business is digitally connected to customers and therefore needs to adopt the same continuous engagement with customer success.
Obviously, that requires a digital makeover at the front-end, in sales, marketing and customer service. But it also means a change of mindset internally, where Internal functions need to open up to the same continuous digital connection. Whether it’s finance, HR and IT or product design and production, it needs to be available anywhere, on demand, change-ready and inherently collaborative. That’s what frictionless enterprise is all about. You can’t do much of this without connected, cloud-native software, so SaaS is an enabler as well as a role model for how it’s done.
Q: When it comes to user expectations and the software they use, has Covid-19 presented SaaS providers with any new opportunities or do they face more challenges?
I think the sudden enforced switch to working from home across so many industries has given SaaS a huge boost. Companies that had already adopted SaaS for most of their systems were able to make the switch almost overnight. Those that are still reliant on in-house software and systems had to go running around frantically trying to build new infrastructure to support remote working at scale.
On top of that, working from home has suddenly become respectable. I don’t think we’re ever going to go back to everyone working in offices like before. Although remote working is quite a new skill for most of us – businesses are still figuring out how to manage distributed teams effectively – I believe the long-term future of most office-based work is that it’s going to become digital-first. That means it has to work just as well out of the office as in the office – for which SaaS is the default software architecture.
Q: With markets seemingly falling back into a state of domesticity, what challenges do SaaS providers face? For example, is it more important to localise (language for example) software and development platforms? Could this encourage the growth of singular communities rather than a connected global community?
I think we need to distinguish between what’s happening today in the physical world from what’s happening in the digital world. It’s as though they’re pulling in opposite directions. In the physical world, borders have been closing, trade is disrupted and businesses are looking at bringing supply chains back on-shore. But on the digital plane, we seem more connected than ever as we all watch the global progress of COVID-19 and the world’s response to it. However nationalistic and protectionist the world becomes, I don’t think we can close the stable door on being a connected global community. Having said, that, it’s always been super-important to localize your product. So do localize, but stay connected.
Q: Is it time for the term ‘SaaS’ to undergo a refresh?
I’ve never liked the term SaaS, I find it ungainly and obtuse. It’s just business automation, delivered online. Why dress it up in jargon? But I think it’s too late to change, we’re stuck with it now. Maybe in a few years’ time we won’t need a special term anyway, because no one in their right mind will use anything else. But never underestimate the ability of the tech industry to come up with some new acronym that’s even uglier!
Phil Wainewright has been a recognized authority on cloud computing as a writer, analyst, consultant and speaker since 1998, when he launched his first online venture to chronicle the early years of the SaaS industry. In 2013 he co-founded the tech media website diginomica to cover the evolution of business applications in the digital era and how they are changing the enterprise. His research and writing here focuses on advances in digital teamwork, people management and business innovation. Phil lives in London with his family and has a BA in English from University College London. He started working in the computer industry in 1985.