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Software as a Service or SaaS solutions vie to be recognized as the fastest-growing segment of one of America’s fastest-growing industries, IT. Provided on a subscription basis and centralized on a remote cloud network, restructuring of businesses since the beginning of the pandemic has made SaaS as the go-to technology for a plethora of reasons, including affordability, flexibility, and portability.
The market value of the SaaS industry is only increasing as the startup trends of 2021 bring on the artificial intelligence trends of 2022. As the AI trends website Dataiku reports in depth, the most important new trend in startups in SaaS is software that makes AI an organic part of company-wide strategic agendas.
Startups in SaaS are catching fire as:
- Businesses start to derive more value from AI available through SaaS than they gain from their data scientists/
- AI, business intelligence, and automation are merging into a single IT function, and
- The majority of machine learning projects pushed by SaaS leave the planning and testing stages and become part of the everyday operations of companies using cutting-edge technology.
The AI trends website BMC reports that world-wide end-user spending on public cloud spending is growing from US $341 billion in 2021 to projections of $396 billion in 2022 and $482 billion in 2023. Business organizations all over the world are moving up their timelines on their digital business timelines with SaaS to achieve system reliability and to address other permanent changes in their workforces brought on by the pandemic, says Brandon Medford, senior principal analyst at Gartner.
There has never been a better time for SaaS startups. In this article, we will tell you the general principles of riding the wave of SaaS trends, whether you are a SaaS operator looking to add a new product in their five-year plan or a tech entrepreneur looking for their next big break. Let’s dive right in.
Startup Trends 2022
We have put together some of the industry trends and statistics for the SaaS industry that will drive new competition for established companies and provide windows of opportunity for status in 2022. We’ll start with the biggest driver of the SaaS industry in 2022:
SaaS spending is growing much faster than general IT spending.
Spending on SaaS is growing at a rate greater than 20 percent per year. Startups to look out for in 2022 will be those that support collaboration, remote work, and hybrid workforce models will be leading the market.
But B2B marketing trends in 2022 are giving SaaS some stiff competition.
B2B content marketing trends in 2022 are setting up explosive growth in infrastructure as a service (IaaS) and platform as a service (PaaS), both of which are expected to reach sales double their levels in 2020. What this means is that marketing B2B in 2022 and later will focus a lot more on the differences between SaaS and IaaS and PaaS, and how to choose among them.
With SaaS, end users outsource control over applications, data, runtime, middleware, O/S, virtualization, servers, storage, and networking. With IaaS, end users take back control over virtualization, servers, storage, and networking. With PaaS, end users become responsible for everything except platforms and data. They manage run time, middleware, O/S, virtualization, servers, storage, and networking.
Of course, with traditional on-premises systems, end users manage and control all of those functions.
SaaS will continue to grow in popularity with startups in other industries, companies that haven’t had time or money to develop their own IT departments. SaaS will be the first choice for seldom-used applications, like tax planning.
But SaaS customers will be increasingly sensitive to limitations in features. They will have mission-critical concerns about data security, and demand evidence of protection against ransomware attacks. They will look for products they can integrate with their existing systems. And they will want an easy exit if performance becomes an issue.
Tech Startup Trends 2021 and Where They Are Taking Us in the Future
So, how can SaaS developers predict the features end users will demand in 2022 and future years? And where do they need to be on the lookout for the competition?
We have identified some of the hottest business trends of 2021 (some of which not everyone realized were as hot as they turned out to be) that drove the fastest-growing startups in 2021 and will affect B2B marketing trends from 2021 into 2022 and beyond. Startup statistics for 2021 show several areas of intense interest and innovation.
One of the most important artificial intelligence trends in 2021 for the SaaS industry was the integration of AI into SaaS itself. AI empowers the SaaS industry to automate its services so it can reach more customers at lower prices. When work can be automated, staffing costs are cut, and there are no limits to how many customers can be served at the same time.
Another of the most significant tech startup trends in 2021 was the use of machine learning (ML) in the creation of SaaS.
SaaS automates enormous amounts of work. ML uses the data generated by all of that work to create models that predict actionable future events.
ML tests different models to achieve predictive significance. In the creation of these models, ML “learns” a business. In the case of SaaS, ML enables the system to learn from each task so it can provide a better end user experience each time.
On a company-wide level for the SaaS provider, ML identifies patterns in user experiences and connects to optimal solutions that can be implemented for every customer. At the same time, ML can give customers the tailored experience without which they might choose IaaS or PaaS solutions from SaaS competitors.
Another important B2B marketing trend for 2021 was the expanded availability of centralized analytics. The fastest growing startups of 2021 provided the tools that moved data across platforms to give everyone in end user business the same information.
Startup statistics for 2021 also show success when SaaS companies provide:
- Vertical SaaS. Different teams in the end user company need to use the same platform for data to become meaningful information. Vertical SaaS connects every team to company management on all day to day processes. Of course, eliminating the need for multiple SaaS products reduces costs at the end user company.
- White Label SaaS. As companies everywhere are becoming more tech-conscious, some companies want software that reflects their industry and their niche within it. SaaS companies are increasingly offering “white label” service that provides software that has been repackaged to look native to the company—without the prohibitive cost of original software development.
- Micro-SaaS. In a booming industry like SaaS, the provider landscape will become crowded. Some SaaS companies are creating narrower, niche solutions that the market hasn’t seen yet. These micro-SaaS products can be plugins, extensions, or single-feature software.They range from a plugin that helps managers monitor their Tweets to a tool that helps users migrate websites to new domains. Micro-SaaS does not necessarily command a micro price. In 2022, two of the most popular micro-SaaS products, one for the Tweet management platform and the other for the website migration tool, are licensed for US $2K and US $5K respectively.
- Low-code SaaS. Low-code SaaS solutions enable end users to build their own software with minimal knowledge of coding. These SaaS platforms feature visual platforms, dropdown menus, and drag and drop utilities that create completely functional software and applications.
The Startup Environment: B2B Startup Trends
The transformation of digital technology has been the silver lining on the dark clouds affecting B2B trends in general since 2020. SaaS technologies had already reached a point that they were ready for prime time. Even before COVID-19 put businesses through a stress test, many businesses were ready to adopt cloud computing.
Since 2020, the whole world has demanded a virtual way of doing things. Startups in SaaS have become the glimmer of hope that the economy will be able to use the tools created by tech entrepreneurs to reinvent itself.
Announcements of new companies dominated B2B social media trends in 2021 along with B2B PR trends in 2021. There was a greater buzz in social media from startups in the EU than in the USA. There were more EU tech startups in 2020 than in the US. But the capitalization of tech startups in the United States dwarfed the capitalization of tech startups in Europe, nearly US $400 billion in the US compared to just US $19 billion in the EU.
After a booming year for US tech startups, it is natural to ask how many startups fail in the first year. Investopedia tells us that, in the US, about 21.5 percent of startups don’t even last 12 months. Another 30 percent fail in their second year. Only about 1 in 10 startups is still in business after 10 years. Many startups, of course, benefit from mergers and acquisitions.
AI Startup Trends
Not to be overlooked in any overview of SaaS are AI trends, especially tech startups providing AI through SaaS. SaaS platforms are providing AI to accurately identify and classify information in routine transactions, for example, analyzing bid proposals and contract information. SaaS-disseminated AI can search and compare documents on the basis of meaning, not on keywords. And SaaS can make all of these utilities available with a minimum of training time for the end user’s staff.
Some Interesting Facts About Startups Worldwide
In the modern market for cloud computing, many tech entrepreneurs are interested in international startup statistics. Current data on the number of startups worldwide or the number of startups by country, including a very useful list of startup companies, is available from Cloudways. The number of startups in India with useful summary information about each company is available from the Economic Times of India site.
For specific information on current startup success by country or answers to questions like “How many tech startups in the US?” Forbes is an excellent, constantly updated source of information.
Startups by Industry
The best startup industries in 2021 and likely for the next few years will be those that provide SaaS, IaaS, or PaaS, especially those that include AI and machine learning. For global information about startups by industry, consult Forbes.