Four Factors That Will Bring About Meaningful Changes for SaaS Businesses

Cloud computing, particularly Software as a Service, is quickly becoming the norm, replacing on-premise software with the exception of legacy installations. To this end, 73 percent of organizations indicate that nearly all their apps will be SaaS-based by 2021.

But even as myriad software solutions are being ported to the cloud, technology is advancing in other ways that will undoubtedly impact the kinds of functionality delivered to users. In my role at BIP Capital, I closely watch the SaaS and tech-enabled services landscape. Here are four diverse factors that are of interest to me in terms of their potential for SaaS market disruption:

 

  1. Our concept of display and data-capture devices is changing. It used to be that one thought of SaaS as simply a desktop or laptop talking to an application in the “cloud.” Now, however, applications are being consumed in many more ways, including via mobile phones and tablets, wearables such as wristwatches and glasses, and a host of other Internet of Things (IoT) devices. The emergence of new software-enabled technology—think in-car driverless features or wireless, remote health monitoring of patients—has exciting and almost limitless potential. By extension, these new touchpoints are changing the ways in which we as users are interacting with applications, rapidly expanding beyond the traditional screen and keyboard.

 

  1. AI and ML continue to drive innovation. The increase in connectivity we just discussed is also creating an explosion of data which is driving our use of artificial intelligence and machine learning in order to harness it effectively. Consider this: It is estimated that over 50 billion deviceswill be connected to the Internet this year, and we’ll also generate around 40 trillion gigabytes of data. Our ability to capture this data and convert it into deep learning using AI/ML is growing daily, presenting a huge opportunity for SaaS businesses to gain ground in terms of more intelligent software, improved performance, and more personalized experiences.

 

  1. Digital twinning to duplicate the physical world. More manual processes will be taken over by intelligent equipment—as one example we can look to the BIP Capital portfolio company Pointivo’s use of AI-driven drones to provide visual 3D field data that can be used for a multitude of processes, such as roof and tower inspections and other tasks in order to improve productivity or replace humans in jobs than can be difficult or even dangerous. Such capabilities are enabled by converting pictures to datasets that are effectively digitized versions of things that exist in the physical world. Perhaps the most familiar version of such digital twinning is the GPS in your vehicle. We interact with this digital reproduction of roads and geographies every time we punch in a location we’re headed to, so it can guide us by literally showing and telling us where to turn. As AI and intelligent equipment continue to mature, we’ll see more applications that integrate digital twinning for a range of uses.

 

  1. The battle between personalization and privacy. Just as consumers expect more personalization in automated services, they are also reluctant to trade their privacy to get it. Trust issues have given rise to new legislation such as the General Data Protection Regulation (GDPR) and the California Consumer Protection Act (CCPA). At the same time, people are demanding more control over their own data. In the United Kingdom, for instance, open banking legislation is working to democratize consumers’ electronic access to their bank accounts, removing some of the autocratic control by financial institutions. And, here in the United States, Fast Healthcare Interoperability Resources (FHIR) is a standard around data formats and elements, with the goal of giving consumers the ability to carry their electronic medical records between healthcare providers. These impacts, both those providing access to data and those limiting it, are certain to be significant disruptors to SaaS businesses—or to any business—handling personal data.

 

Advances in technology will continue to raise the bar for application development, largely made possible by our continually evolving capability to capture voluminous data and convert it into knowledge. At the same time, rising arbiters of data are destined to add very often necessary complexities.

SaaS companies that keep their fingers on key market trends and innovations, as well as the shifting landscape around data security, data access, and privacy, will be most likely to have competitive advantage in our digital age.

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