If globally the SaaS model benefits companies which use them, the explosion of the number of SaaS also creates some problems which impact directly the way businesses consume softwares. Problems mean also opportunities for third party players to solve them. We’ll look at 5 pain in the SaaS resulting this situation and how some startups are addressing them.
Integration: integrate SaaS with your existing processes and tools (softwares, ERP)
User management: how to manage users within your company (creating new accounts, managing existing ones etc…)
Billing management: how to centralize SaaS billing
Licenses and SLA management: how to manage different types of licenses and SLAs
With probably more than tens of thousands of SaaS on the market it’s getting more and more difficult for businesses to find the good one. If you look only at CRM softwares, for example, you’ll find plenty of SaaS which offer different features with different pricing and different SLAs. In these conditions it’s really hard to choose the best one which fits your needs and constraints.
More and more startups (and bigger players) want to address this “discovery” problem and their solutions come with 3 main flavors:
Discovery is a hard problem to solve which exists in basically every industry: internet has Google to help you find out what you want, online commerce with price comparison websites and marketplaces (Amazon, Etsy, eBay)…, mobile apps with appstores and app recommendation engines etc… It’s usually a hard business because it requires high volumes: you need a lot of items to attract a lot of users in order to make money (especially when the business model relies on affiliation). A lot of players are tackling this problem and it’s hard to know who is going to win… But it’s a high volume low margin business.
Integration is also another big concern for a lot of companies which want to consume SaaS. It’s great to use a software with a neat user interface and innovative features but very often it’s also critical that it offers bridges with your existing softwares and can be easily integrated with your IT environment and processes.
More and more SaaS makers now provide bridges to other applications through their APIs but it requires work to properly integrate them so there is still a lot of opportunities for third party players to solve this integration problem.
Startups like RunMyProcess, IFTTT, Zapier bet on “process” and “workflows”. Basically they help people create connexion between SaaS (and sometime on premise softwares) through drag and drop interfaces. For example you can connect Mailchimp with your Salesforce CRM through IFTTT.
Integration is a real hard problem, hard to solve from a technical point of view: there is no international “services interconnexion” standard widely used so a lot of customization is needed. Scaling is also another concern: if an interconnexion platform offers too few connectors it won’t be used by businesses so they need to have a technology flexible enough to integrate thousands of services and to keep up to date with possible changes. With the API trend this problem will probably get easier to solve in the years to come.
More softwares as a service also means more user management to do:
onboarding: how to deal with creating new accounts, setting privileges and teaching people how to use them.
offboarding: how to deal with employees leaving the company and making sure they don’t have access to your data afterward.
password management/security: how to deal with password security
Identity management has always been a problem in enterprise softwares with solution like “single sign on” that have been dreamed of for decades but are barely working. It gets even more complicated with so many SaaS, software marketplaces, devices (mobile, tablet, PC etc…).
A bunch of startups are tackling identity management and password management like Okta. If you look at their team and the funds they have raised so far (more than 50 millions of $) you can see that it’s not an esyl problem to go after.
When you use plenty of SaaS within your company and when the time comes to pay the bills it can get quite complicated. We often hear that one of the SaaS model advantage is billing flexibility (subscription, pay what you consume…), however it can get quite complicated when you have to deal with many SaaS at the same time.
There are two main problems in SaaS billing:
billing overview: you need to consolidate all the billing data coming from all your SaaS easily, centralize them in one convenient place.
optimization: since SaaS billing can depends on your usage (how much you used, how many users etc…) it can be easy to pay more than what you really need, this where cost optimization tools can help.
A lot of startups are also trying to solve this problem. Like Cloudability which deals with both of the points above or Cloudyn which specifically look at your AWS usage to optimize its cost.
License and SLA management
Last problem I wanted to talk about in this article is SLA management. Having Spoken with a lots of companies that want or are using SaaS, one of the biggest fear they have is how to deal with SLAs.
It’s an important topic but difficult to deal with: how to distinguish what is important or not, how to know which SLAs you are really dealing with (ex you use a CRM SaaS which uses AWS, are you also depending on AWS SLAs?), can you negotiate your SLAs? etc…
I don’t know any startup that is trying to solve this problem (maybe it exists) and I don’t even if it’s possible but I think that it’s a real problem and there is money to be made here.