software-as-a-service-companies

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.

Salesforce

salesforce-business-model
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-competitors
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

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

shopify-business-model
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.

shopify-competitors
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

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

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.

SAP

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.

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

Infrastructure as a service (IaaS)

iaas-business-model
IaaS stands for infrastructure as a service. Together with other “as-a-service” models, the basic premise of this model is to offer a solution to the final customer without having to host it on-premise, with complex implementations and large overhead. The IaaS model provides virtualization, storage, network, and servers where the final user/customer will handle applications, data, operating systems, and run times.

Read Also: IaaS Business Model

Platform as a service (PaaS)

paas-business-model
PaaS stands for the platform as a service. Together with other “as-a-service” models, this model’s basic premise is to offer a solution to the final customer without having to host it on-premise, with complex implementations and large overhead. The PaaS model is a form of evolved cloud computing. The provider, together with virtualization, storage, network, and servers, provides middleware and runtime to the user/customer, which only handles data and applications.

Read Also: PaaS Business Model

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