Do you remember the time we had software?
Well, we used to have it but it is increasingly disappearing. What used to be software is increasingly moving to the cloud.
With that it transforms to software-as-a-service or simply SaaS.
SaaS is awesome.
Mostly done well, it can be accessed from our web browsers, has dedicated apps and is available on the common platforms (iOS, Android, desktop and most browsers).
SaaS is basically everywhere where we previously had (desktop) software.
Categorising SaaS
Business Model Canvas
Some areas seem to be particularly well presented. Or shall we say over-presented? There are over 8,000 marketing solutions.
Looking at Crunchbase we will find over 25,000 SaaS companies.
And there are certainly many that have not even been listed there.
You can slice, dice and categorise these in many different ways. The above is how I have done it.
Let's now take a look at some of the major categories.
Productivity SaaS
A very popular type of SaaS falls into productivity tools.
I am distinguishing between software that is more catering towards individual productivity and those that are catering towards team productivity.
There is of course no clear cut. You can use MS Word as an individual but also as a team that works concurrently on a document.
But it’s a safe bet that MS Office and similar products are still predominantly used for individual productivity.
Then there is a growing landscape of team productivity SaaS.
Some of them, like Miro, dont even have single user licenses and the minimum user count is two.
These tools are very cool and exciting.
Other fantastic solutions in this space are: CLickUp, Slack, Monday, Trello and many others.
If you have used any one of these you know how engaging they are to use.
Then there are many project and team management type SaaS, communication SaaS etc
We have tools that lend themselves well to workflow management like Zapier and Box.
Box can also be categorised as a content management & integration tool. It can therefore combine abilities of many different tools. MuleSoft is another such tool.
Of course, we can add many more sub-categories to the overall category of productivity software.
Within each of the shown categories we can also list many more exciting tools.
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Enterprise resource planning (ERP) / enterprise software
On the right hand side of the mind map we show the huge field of enterprise management software traditionally known as enterprise resource planning software or ERP.
It’s now often just called enterprise software.
Best known are SAP and Oracle.
But there are 1,000s of other companies in this space. there are
- 3,800 companies under “enterprise resource planning” on Crunchbase and
- 17,000+ under “enterprise software”.
Some have started by focusing on one area within the traditionally huge field of ERP.
Let’s take the space of human resources (HR):
- It now has grown so large that there are many subcategories with innumerable amounts of SaaS solutions.
- In fact, even the overall category runs under a few names, such as HR, human resources management (HRM) or human resources system (HRS) among others.
- Some focus on just one function, say payroll, wishin the field of HR.
- Others combine several functions and modules (take Workday).
- Some focus on small and mid-size companies and may endeavour to expand to larger businesses from there.
Typical modules of HR systems are:
- Recruitment
- Training
- Payroll
- Leave management
- Expense management
- Performance management
- Career management
- Talent management
- And more
Best-of-breed enterprise software
Traditional ERP often aims to cover all aspects.
Newer HR SaaS often starts with a focus on one or more modules and expands from there.
The focus on individual modules within traditional ERP is sometimes also called best-of-breed enterprise software because they aim to excel the respective modules of traditional ERP software.
It’s not different in the other core ERP functions with finance most likely being the biggest one.
It’s a huge field of probably thousands of solutions.
There are multiple sub-categories in their own right with hundreds of SaaS solutions and fuzzy boundaries and overlaps with other categories.
Specialised SaaS solutions
Aside from these two major categories there are many other categories which I have combined under “specialised” SaaS solutions.
Remember one can categorise things differently but to some extent I have categorised it in this way because it will be useful for our following discussion in this series.
Customer Relationship Management (CRM) / Marketing SaaS
The example subcategories are CRM/marketing, ecommerce solutions and web asset management.
There are thousands of SaaS solutions just in the CRM/marketing space (8,000 and counting just in marketing).
It is also how Salesforce once started who were one of the early protagonists of SaaS (or let’s say the move of software distribution to online channels).
Ecommerce SaaS Solutions
The other sample category for specialised SaaS are ecommerce solutions
Here I am not talking about ecommerce businesses as such
eCommerce solutions such as Bigcommerce are SaaS solutions that companies can use to create their own web stores with the many aspects and customisability options that are part of it.
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Web Asset Creation SaaS
We have the very exciting space of web asset creation SaaS of all sorts and flavours.
Well-known examples are Wix and Squarespace to build websites. But both are expanding to other areas.
Wix has expanded into eCommerce websites including web store functionality.
With this they are now directly competing with the likes of Shopify.
Collision course?
This is a common trajectory whereby initially different SaaS may end up becoming direct competitors over time on a set of core features and thus customer segments.
SaaS solutions may initially provide distinctly different value propositions but over time their value propositions can overlap such that over time they become competitors (at least to some degree).
This may intensify or reduce depending on the chosen trajectories.
It is also conceivable that Wix & Squarespace attract small businesses whereas the eCommerce solutions target medium-large firms.
The same type of dynamics can of course occur in many other areas.
But if we go back to our Martech example with 8,000 solutions, things are obviously far more difficult and in reality sales & marketing expenses will play a big role in surviving such a tough space.
Different types of playbooks
Different types of SaaS follow different playbooks and this will be the subject of the upcoming videos.
We will broadly distinguish between the playbooks for those on the left and the right hand side.
The categories in the middle more are case-by-case. Broadly speaking, the further they are to the left, the more likely they are similar to the LH solutions wrt the aspects that we are going to cover and vice versa.
More to come
SaaS is a super-exciting field with awesome solutions.
In the next parts of this series we will learn more about their business model elements and tactics.
There is a lot that we can learn from these great innovators.