Software-as-a-service Companies

The software-as-a-service (SaaS) industry has become among the largest tech industries today. Software-as-a-service describes any cloud-based application delivery and consumption business model where companies charge users a subscription fee depending on their desired level of functionality.

The first modern example of a SaaS company is probably Salesforce, which launched its customer relationship management (CRM) platform in 1999. Back in those days, subscription-based software was considered unviable for large enterprises. 

Over time, however, internet technology became sufficiently advanced that providers removed bandwidth limitations – which enabled business processes to become faster and more reliable as a result. Additional improvements in terms of ease of use, core functionality, and cost-efficiency have contributed to the exponential growth of the industry seen today.

Subscription ModelOffering software on a recurring basisPredictable revenue and customer retention
Freemium ModelProviding a free basic version with paid upgradesAttracts users and encourages upsells
Product-Market FitEnsuring the product meets customer needsIncreased user satisfaction and retention
Customer OnboardingGuiding users through the productReduces churn and boosts user engagement
Customer SupportProviding assistance and troubleshootingImproved user satisfaction and retention
User AnalyticsTracking user behavior and engagementInformed product improvements and marketing
Pricing StrategyDetermining optimal pricing tiersMaximizes revenue and customer acquisition
User FeedbackGathering and acting on user feedbackEnhances product features and user satisfaction
SaaS MarketingPromoting the software through various channelsIncreases brand visibility and user acquisition
Data SecurityEnsuring data protection and complianceBuilds trust and attracts enterprise clients
ScalabilityAbility to handle growth in users and dataSupports business expansion and reliability
Churn Rate ReductionStrategies to reduce customer churnIncreases customer lifetime value and revenue
Cross-Selling and UpsellingOffering additional features or plansBoosts revenue from existing customer base
Integration CapabilitiesCompatibility with other software systemsIncreases value and appeal to potential users
SaaS Sales FunnelOptimizing the user journey from awareness to conversionEnhances user acquisition and retention
Content MarketingCreating valuable content for the target audienceAttracts and educates potential users
Trial PeriodOffering a free or limited-time trialReduces barriers to entry and boosts conversion
Affiliate ProgramsPartnering with affiliates for promotionExpands reach and drives new customer acquisition
Customer Success ManagementEnsuring users derive value from the productReduces churn and fosters long-term relationships
User Training and EducationProviding resources to help users succeedEnhances user proficiency and satisfaction
Customer Retention StrategiesImplementing tactics to keep customers engagedIncreases customer lifetime value and revenue
Data Analytics and InsightsLeveraging data to make informed decisionsDrives product improvements and business growth
Compliance and PrivacyAdhering to industry regulations and standardsBuilds trust and avoids legal issues
Competitive AnalysisMonitoring competitors and market trendsHelps identify opportunities and threats
Feedback LoopsCreating channels for continuous feedbackEnhances product development and user satisfaction


Salesforce main revenue generation strategy is based on a subscription-based cloud service. Over 92% of Salesforce revenues come from four categories of cloud CRM (Customer Relationship Management) services, that span from the sales cloud to marketing cloud. The remaining revenues are primarily driven by professional services. In 2017 the company generated $8.39 billion in revenues. 
Salesforce is a cloud-based customer relationship management (CRM) provider, allowing businesses to build meaningful and sustained relationships with their customers. With robust, customizable software that integrates with social media, Gmail, and Microsoft Outlook, the Salesforce CRM platform is rated highly among businesses of all shapes and sizes. Recent data has shown that the company has captured 19.5% of the global CRM market.

Salesforce was founded by Marc Benioff, Parker Harris, Dave Moellenhoff, and Frank Dominguez, who were the first people to launch a platform with the sole intention to offer software-as-a-service.

In addition to providing a CRM product, Salesforce also offers customer service, analytics, application development, and marketing automation for enterprise clients.


Adobe was founded in 1982 by John Warnock and Charles Geschke. The company is perhaps most associated with its flagship software for creatives such as photographers and graphic designers. 

The company generated revenue of $4.216 billion in 2011, but sales started to flatline soon after. This was caused by the rapid advancement of creative software, which exposed Adobe’s slow 18 to 24-month product update cycle. 

The Adobe Creative Cloud monthly subscription was released the following year to grow the user base, with over 4 million creatives on the platform by 2015.


Shopify is an e-commerce platform enabling merchants to commercialize their products via a monthly subscription fee, and additional services provided by the platform. Its core business is subscription-based, even though in 2018, the company made over 50% of its revenues from another stream called merchant solutions.

Shopify is a B2C eCommerce platform founded in 2006 by Tobias Lütke, Daniel Weinand, and Scott Lake. 

Shopify is feature-rich and simple to use for businesses that are new to the world of eCommerce. The SaaS-based sales system saves merchants the hassle of having to maintain a server and there is a range of subscription plans to suit various sized companies.

Features include product, order, and inventory management, multiple sales channels, and multi-vendor integration.

In just fifteen short years, Shopify has grown from humble beginnings to become one of the fastest-growing eCommerce platforms online. The Shopify eCommerce solution is perhaps best suited to users who desire an easy, flexible and affordable starter solution for their online store. The provider now has upwards of 820,000 stores accounting for 20% of the total market share. However, the continued success of any company in the dynamic digital market is never guaranteed.


Atlassian is an Australian software company founded by Mike Cannon-Brookes and Scott Farquhar in 2002. Total revenue for the fiscal year 2021 was $2.1 billion.

Atlassian is one of the foremost providers of collaboration tools for distributed and remote workforces. It is a so-called “pure-play” SaaS company devoid of bells and whistles with solutions tailored to meet various team sizes and functions.

Products under the Atlassian banner include Confluence, Trello, and Bitbucket. 


Zoho is an Indian B2B multinational tech company specializing in web-based business tools. 

The company, which was founded in 1996 by Tony Thomas and Sridhar Vembu, offers a suite of productivity and other tools via the SaaS approach. Zoho addresses use cases across human resources, marketing, IT service management, customer relationship management, and workplace collaboration. 

In January 2020, the platform surpassed 50 million users from small, medium, and large enterprises.


Though not exclusively a SaaS provider, German multinational SAP deserves a mention. The company is the largest non-American software company in terms of revenue and the largest in Germany with a market cap of around $168 billion.

In terms of its software-as-a-service offering, the company’s products are mostly the result of several acquisitions, such as Fieldglass, Concur, and Ariba to name a few. Having said that, it also sells proprietary sales cloud, sales intelligence, and CRM-based products.

Key takeaways:

  • Software-as-a-service describes a cloud-based application delivery and consumption business model where companies charge users a subscription fee depending on their desired level of functionality.
  • The first modern example of a SaaS company is Salesforce because it was founded with the sole intention of offering software-as-a-service. Adobe is another SaaS company that adopted the model in response to declining sales in 2011.
  • Other companies include eCommerce platform Shopify, remote workforce collaboration provider Atlassian, and Indian B2B productivity firm Zoho. German multinational firm SAP is also a significant player despite having other interests.

Key highlights of the Software-as-a-Service (SaaS) industry:

  • SaaS Definition: SaaS is a cloud-based application delivery and consumption business model where companies charge users a subscription fee based on their desired level of functionality.
  • First Modern SaaS Example: Salesforce, founded in 1999, is considered one of the first modern SaaS companies, offering a subscription-based customer relationship management (CRM) platform.
  • Growth Factors: Internet technology advancements, ease of use, core functionality, and cost-efficiency have contributed to the exponential growth of the SaaS industry.
  • Salesforce: Salesforce’s main revenue generation strategy is based on a subscription-based cloud service, and it has captured 19.5% of the global CRM market.
  • Adobe: Adobe shifted to a subscription-based model with the Adobe Creative Cloud to grow its user base, offering software for creatives like photographers and graphic designers.
  • Shopify: Shopify is an e-commerce platform with a core subscription-based business model and offers feature-rich solutions for businesses of all sizes.
  • Atlassian: Atlassian is a pure-play SaaS company providing collaboration tools tailored to meet various team sizes and functions.
  • Zoho: Zoho is an Indian B2B tech company offering a suite of productivity tools for human resources, marketing, IT service management, customer relationship management, and workplace collaboration.
  • SAP: While not exclusively a SaaS provider, SAP has a significant presence in the SaaS industry through acquisitions and proprietary products.
  • Industry Growth: The SaaS industry is expected to continue growing as businesses increasingly adopt cloud-based solutions for their software needs.

Read More: Cloud Business ModelsIaaS vs. PaaS vs. SaaSAIaaS Business Model.

Connected Business Model Types And Frameworks

What’s A Business Model

An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

Business Model Innovation

Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Level of Digitalization

Digital and tech business models can be classified according to four levels of transformation into digitally-enabled, digitally-enhanced, tech or platform business models, and business platforms/ecosystems.

Digital Business Model

A digital business model might be defined as a model that leverages digital technologies to improve several aspects of an organization. From how the company acquires customers, to what product/service it provides. A digital business model is such when digital technology helps enhance its value proposition.

Tech Business Model

A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Platform Business Model

A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

AI Business Model


Blockchain Business Model

A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Asymmetric Business Models

In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Open-Core Business Model

While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Cloud Business Models

Cloud business models are all built on top of cloud computing, a concept that took over around 2006 when former Google’s CEO Eric Schmit mentioned it. Most cloud-based business models can be classified as IaaS (Infrastructure as a Service), PaaS (Platform as a Service), or SaaS (Software as a Service). While those models are primarily monetized via subscriptions, they are monetized via pay-as-you-go revenue models and hybrid models (subscriptions + pay-as-you-go).

Open Source Business Model

Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

Marketplace Business Models

A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

B2B vs B2C Business Model

B2B, which stands for business-to-business, is a process for selling products or services to other businesses. On the other hand, a B2C sells directly to its consumers.

B2B2C Business Model

A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

D2C Business Model

Direct-to-consumer (D2C) is a business model where companies sell their products directly to the consumer without the assistance of a third-party wholesaler or retailer. In this way, the company can cut through intermediaries and increase its margins. However, to be successful the direct-to-consumers company needs to build its own distribution, which in the short term can be more expensive. Yet in the long-term creates a competitive advantage.

C2C Business Model

The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers. Customer to customer (C2C) is, therefore, a business model where consumers buy and sell directly between themselves. Consumer-to-consumer has become a prevalent business model especially as the web helped disintermediate various industries.

Retail Business Model

A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

Wholesale Business Model

The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Crowdsourcing Business Model

The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.

Franchising Business Model

In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.

Brokerage Business Model

Businesses employing the brokerage business model make money via brokerage services. This means they are involved with the facilitation, negotiation, or arbitration of a transaction between a buyer and a seller. The brokerage business model involves a business connecting buyers with sellers to collect a commission on the resultant transaction. Therefore, acting as a middleman within a transaction.

Dropshipping Business Model

Dropshipping is a retail business model where the dropshipper externalizes the manufacturing and logistics and focuses only on distribution and customer acquisition. Therefore, the dropshipper collects final customers’ sales orders, sending them over to third-party suppliers, who ship directly to those customers. In this way, through dropshipping, it is possible to run a business without operational costs and logistics management.

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