The SaaS market rebounds after the pandemic crisis

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Bill Huber (ISG)

Credit: ISG

According to new research, the global demand for vertical software as a service (SaaS) solutions targeted at specific industries is booming, bringing the SaaS market back from a pandemic crisis and positioning it for rampant and continued growth in markets. months to come.

It’s hard to believe that the global SaaS market has suffered a downturn at the worst of the COVID-19 pandemic, given the number of organizations that have switched to cloud-based solutions to stay in touch amid the crisis. remote work rush, but it does, new data suggests technology research and consulting firm Information Services Group (ISG).

However, companies around the world continue to migrate proprietary, licensed software to SaaS subscriptions as they seek innovation, better user experience and lower costs, according to ISG.

The research firm Application platforms as a business service ISG Provider Lens 2021 A report on the global market suggests that the value of annual combined SaaS and infrastructure-as-a-service (IaaS) contracts is expected to increase by 21% in 2021.

Indeed, ISG expects organizations to increase their spending on core business applications such as enterprise resource planning (ERP), human capital management and customer relationship management, which are increasingly delivered and billed as SaaS subscriptions.

It is precisely these types of apps that can help – and have helped – businesses keep operating during disruptions such as the COVID-19 pandemic, ISG noted.

Going forward, companies are expected to launch major projects over the next 12-18 months aimed at business continuity, centralization, cost optimization, and greater collaboration and visibility.

Additionally, organizations should adopt SaaS solutions for an even wider range of applications.

“Businesses across industries are adapting their systems to take full advantage of digital capabilities,” said Bill Huber, ISG Partner, Digital Platforms and Solutions. “SaaS has been gaining traction for several years as companies use it as a springboard for new digital initiatives, and we believe demand will continue to grow this year as a solution for both back-end and front-end applications. “

Against this backdrop, vendors are focusing on developing pre-built integrations for specific industries and meeting industry key performance indicators (KPIs), ISG said, with the pandemic sparking particularly strong demand for vertical SaaS solutions. for supply chain management and ERP.

According to ISG, one of the main drivers of SaaS growth is the availability of modern application programming interfaces (APIs) for easy integration.

“APIs allow channel partners and integrators to easily combine sets of applications to meet the needs of specific customers. This shortens the time to market for new offerings, allowing vendors to focus on their core capabilities and develop features that set them apart, ”ISG said in a statement.

Meanwhile, mobile app personalization is shaping up to be a key trend for SaaS providers looking to deliver a superior user experience, with built-in machine learning and artificial intelligence designed to deliver better insights through mobile dashboards. , according to the research firm.

But although the SaaS market has a growing number of players, including small niche providers, industry consolidation aimed at increasing scale is expected to continue, ISG said.

“Almost all of the companies covered by the report have acquired smaller suppliers in the past three years. When considering SaaS providers, customers should consider the chances of acquiring the business and be mindful of support options, ”the company said.

Earlier this year, ISG revealed that the managed services market in the Asia Pacific (APAC) region jumped in the second calendar quarter of 2021, marking the best quarter in two years.

The APAC managed services market saw an 87% annual increase in contract value (LCA) in the three months ending June 30, reaching a record $ 929 million, ISG said in July.

Also in July, the company noted that businesses were increasingly turning to cloud outsourcing providers to manage their private and hybrid cloud infrastructure as they faced increasingly complex IT environments.

Indeed, while many companies froze their outsourcing efforts at the start of the pandemic, others are now planning to use outsourcing services for the first time in 2021, the firm suggested.

“Companies around the world have realized that outsourcing the management of their cloud infrastructure is a great way to realign their IT systems to their business goals in the most cost effective way,” said Jan Erik Aase, Partner and Global Leader , ISG Provider Lens Research, at the time.



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