10 Most Important SaaS Trends And Developments Of 2020

2020 has been an unpredictable year, to say the least! The global COVID-19 created many hurdles, and industries everywhere have suffered. However, SaaS has proven itself to be resilient and recession-proof!

Here are the top 10 most important trends and developments that allowed SaaS companies to thrive during 2020:

1. Public SaaS Companies’ Market Cap Reaches $1 Trillion

The SaaS market capitalization reached $1 trillion in 2020, marking a major milestone for the industry. This growth was fueled by companies like Salesforce and Shopify, with the five largest firms growing over 60 times since 2008.

The compound annual growth rate of public SaaS companies has continued to accelerate over the last two years, growing from 35% to 45%. This is an impressive metric considering the rapidly changing business environment that all of these organizations were faced with this year!

2. SaaS Acquisitions and IPOs

Another trend that fueled the growth of SaaS in 2020 was acquisitions and IPOs.

The industry reached the $1 trillion market cap thanks to companies going public, such as Zoom. Eight of the SaaS companies that began trading publicly, like Slack and Datadog, are now one of the top 50 brands in the industry.

For example, Zoom purchased Keybase, a startup that focuses on encryption and cybersecurity, to fix issues it faced early on this year with securing its platform. Another notable SaaS acquisition included Square, which acquired Stitch Labs. They are hoping to capitalize on their omnichannel operation management tools.

3. AI is Here to Stay

A SaaS development that is not surprising is the continued use of AI - or artificial intelligence. This trend is here to stay!

Companies like Amazon and several banks are relying on the SaaS company AppZen to extract valuable information from unstructured data. Their AI technology can analyze documents like receipts and contracts to recognize patterns and perform transaction validation. This tool also allows organizations to discover fraudulent or non-compliant activity.

Gong.io is also utilizing AI to examine conversations and audio recordings from platforms like Zoom and GoToMeeting. The data they collect allows them to pinpoint the topic of conversation, the main idea, and when competitors are mentioned. Artificial intelligence like this can help improve sales calls and measure the effectiveness of current marketing processes.

These are just two of the many use cases for AI and SaaS – there is more to come in all areas that involve big data!

4. The Rise of Vertical SaaS

Vertical SaaS is another 2020 trend taking the industry by storm. A vertical SaaS organization focuses on a specific industry and provides unique features for companies to boost productivity and effectiveness.

Unlike horizontal SaaS companies like Salesforce that cover generalized needs, these firms work to serve a niche area so that they can completely understand the processes they are enhancing.

Vertical SaaS has been gaining popularity for industries like healthcare, travel, and agriculture.

5. Product-Led Growth

Product-led growth focuses on the user experience. Everything the SaaS company does, from marketing, pricing, and customer engagement, is centered around the products and services you offer.

In 2020 we saw continued traction for product-led growth – the better the user experience, the faster the company will grow and have the ability to retain customers. Simply put, the product itself drives the customer experience.

Companies like Dropbox have proven that this model works. They took advantage of this strategy and became one of the fastest-growing firms that reached $1 billion in revenue.

6. SaaS Connections and Integrations

Number 6 on our list of 2020 SaaS trends and developments is connections and integrations.

Businesses need SaaS tools that will integrate with the tools they are already using for their business processes, and as a result, companies have begun to embrace connectivity. Seamless integrations significantly improve customer experiences, and this is now becoming the bare minimum requirement.

Rather than investing in expansive API integration, this trend spurred the development of SaaS connectivity so that companies can provide a well-integrated solution.

7. Going Mobile

A study by CNBC found that over 72% of people will rely on their smartphones to access the internet by 2022. The amount of time that individuals spend on their phones is increasing rapidly, and SaaS companies are beginning to capitalize on this.

Offering products that have mobile app compatibility allow business owners to manage their organization right from their smartphone and allow remote workers to do their jobs just as efficiently as they could in the office.

The global COVID-19 pandemic caused a drastic shift in the work environment for many companies, and the mobile experience is especially important. This was a top trend in 2020, and we expect it to continue beyond into the future.

8. White Labeling

White-labeling is another rapidly growing SaaS trend. This development refers to companies offering solutions for businesses that look native so that they don't have to deal with a wide variety of software providers.

It also allows SaaS companies to access a quick channel to enter into a specific market rather than building a completely new solution from scratch. The white-labeling trend offers many benefits to business owners and software providers, so we expect this to continue to emerge.

9. The Emergence of MicroSaaS

MicroSaaS refers to smaller-scale solutions that are developed by an individual or a team to improve a function that already exists within a SaaS product. It is hard for new vendors to compete with some of the big players in the industry. MicroSaaS, however, gives them a way to create micro solutions that benefit business processes.

Examples of MicroSaaS include Grammarly, Boomerang for Gmail, and Yoast SEO plugins. They require a much smaller investment and usually operate with low overhead – allowing them to see massive growth in the SaaS industry.

10. Customization and Unbundling

Customization and unbundling are ways for organizations to access the SaaS tools they need without overpaying for features that they will never use. The key here is a customized solution that allows companies to enhance their operations based on their unique organizational needs.

Rather than opting for traditional solutions that are packaged in the form of API, enterprises everywhere are instead choosing an unbundled solution.