January 5, 2018
In 2018, many companies look to digital transformations as key elements of their overall strategy. These transformations typically bundle a suite of the latest technologies to drive efficiencies and increase market share. These technologies do not exist entirely in silos. In fact, they often intersect causing them to complement one another, enhance one another or make the other obsolete.
Artificial intelligence (AI) presents an endless amount of implications for the tech and working worlds. A recent GeekWire article illustrates how AI will start reshaping software as a service, colloquially known as SaaS, in 2018 and beyond. The once burgeoning SaaS market seems to be cooling off a bit, but AI could breathe new life into the industry.
What is SaaS?
Software as a service or SaaS sounds broad and ambiguous because it is. The SaaS business model hosts software for companies on a subscription basis. The software is centrally hosted and managed on an outside server by the SaaS company instead of the user’s proprietary servers. In today’s market, SaaS typically equates to cloud computing. The most common form of SaaS in the business world is CRM or customer relationship management (think Salesforce).
AI and the Future of SaaS
The GeekWire article highlights 2017 as a pivotal year for SaaS companies. Big companies like Microsoft and Google grew and deployed their SaaS products like Microsoft Office 365 and G Suite at a breakneck pace. Smaller SaaS companies like Slack proved that some of the smaller SaaS players can also enjoy major profitability. As more companies move their business operations to the cloud, there’s still plenty of room for growth in the SaaS market.
As AI continues to mature, its effects on the SaaS industry is largely two-fold. Some experts argue that as companies deploy their own AI, that users will rely on SaaS products less and in turn threaten the SaaS pricing model and margins.
Even though AI may threaten some elements of SaaS, these companies also understand the benefits of AI and plan to leverage them. SaaS companies look to incorporate AI into their apps to make them even more useful. Many customers and prospects of look to AI as a cornerstone of their corporate strategy. With AI embedded as a key feature in SaaS products, tech-oriented prospects will be even more likely to buy. AI will most likely bring positive developments to this industry as we see more offerings of “AI as a Service” complement existing SaaS products.