The SaaS ecosystem has been evolving incredibly quickly. Most of the time, the changes in the ecosystem are embodied in one particular company which grows exceptionally quickly. Focusing on these fast-growers, the macro shifts can be hard to discern. Last week, Okta released a report Business at Work sweeps across SaaS to reveal these recent evolutions. These are the points that I found most interesting.
First, most companies, irrespective of size from 1-4k+ employees, use 14 SaaS applications. Though the report doesn’t detail these 14 products, I suspect there is a remarkable consistency across companies in which applications those are.
Here’s my stab at that list: CRM, Marketing Automation, ERP, Expense Management, Analytics, Email, Collaboration, Document Storage, Payroll, HRIS, ATS, IaaS, Customer Support, Recruiting. SaaS startups are either competing within these categories or creating a new category. The consistency of 14 apps underscores the importance of category creation for SaaS companies creating software for newer workflows, in contrast to those replacing existing products.
Second, the chart points to the teams and departments where SaaS has the greatest penetration to date. Collaboration tools should top the list because employees bring them to work. Sales teams, always looking for an edge, also belong to the early adopter segment and buy CRM and online meetings software. Then finance tools for operations management and expenses. Marketing, engineering and HR follow.
Third, mobile is increasingly important across all types of buyers. More than 20% of end users log in mobile; 2.5% log in exclusively on mobile. I’m curious how much user acquisition occurs on mobile. But if SaaS usage trends follow consumer usage - which for some ecommerce and messaging products top 70%+ mobile usage - then mobile will undoubtedly become a critical user engagement and acquisition platform.
Fourth, software serving engineering teams tie collaboration applications for the fastest growing types of SaaS products. PagerDuty, AWS and New Relic are the three listed in Okta’s reports. Each of these companies are building terrific businesses serving a customer segment historically viewed as a challenging buyer.
The SaaS ecosystem is changing quite quickly. By virtue of their position in the market, Okta has a panopticon view of the types of SaaS applications succeeding in the market. And while some of the secular trends like the importance of mobile and the popularity of SaaS colloboration tools are evident, others most notably the rise of SaaS for developers may be a bit more obscure.