The Boring, Unstoppable Rise Of B2B SaaS
Business customers are demanding change in how they want software to work for them. They want software that works right for them, the right way, right now. They don’t want to commit to software they’ve never used in their real environments but prefer to grow comfortable with products in real environments before making multi-year commitments.
This is where B2B Software as a Service (SaaS) comes in. The software of today is rentable and can be verticalized, solutions which can be crafted anywhere in the world and sold to anyone in the world on flexible terms. Traditional software developers are realizing that building horizontal products which suit everyone but please no-one doesn’t satisfy business customers across all segments anymore. It may be boring, but boring solutions are definitely working for B2B customers.
Simple, Boring, Effective
Imagine building workflow software for dry cleaners. Perhaps it tracks pants from pickup to dry-cleaning to ironing to delivery. It helps them inventory supplies and route deliveries, as well as to bill customers and to collect payments.
Or how about building software for those maintaining heating, ventilation, and air cooling systems (HVAC)? This software product would probably track service requests, create route plans, detail parts replaced, create contracts, and track weekly productivity reports. These are perfect solutions for the individual businesses, but seriously basic and boring for smart software engineers building the platform.
Behind each product runs thousands of lines of code, none of which are saving the planet, or building a rocket-ship. They work on algorithms which have been created countless times before and certainly do not require fancy screens or top-of-the-line user experiences. This is software that is boring, plain, and simple. It does what it says on the tin, and the interesting part is that businesses are lapping it up.
Boring Is Booming
But what if I told you that some of the startups creating such (boring) solutions have hit $100 million in recurring revenue while growing 100 percent year-on-year? And that they achieve more than 80 percent gross margins? Or that the market is growing 40 percent annually and that their customers are gobbling up more and more software, faster and faster?
It sure may be boring, but software solutions like these are roaringly successful. Relative to attractive sectors like marketing or sales customer relationship management, such niche verticals attract far fewer founders because no “cool” tech is needed to deliver value. What is needed, however, is deep domain expertise, credibility, trust, tuned workflows, and relationships. All of which take time to build and are ultimately about doing the same things again, and again, every day for months and years.
Yes, I know, boring. However, boring seems to be what B2B customers not only want but crave.
Ten years ago this was not the case. Mid-market customers had to make do with generic software that was not built for them. Today’s software climate is dramatically different: Even dry cleaners can acquire customer relationship management, enterprise resource planning, and Point of Sale software that is custom built for their vertical.
It is no wonder that the estimated total addressable market size for the B2B sector in 2018 represents a combined market value of $134 billion. Infrastructure-as-a-Service is the largest sector at $84 billion and contains large cloud computing companies. Sales is the second largest sector at $34 billion and includes companies such as SalesForce and HubSpot. Software as a Service is growing rapidly alongside this.
In fact, based on a survey conducted by BetterCloud, 73 percent of organizations who responded said that the majority of their apps will be SaaS by 2020.
Boring is booming.
Simplicity Through Diversity
These software solutions certainly may be boring for developers, but beautiful to end users. Consider the garage owner with ten mechanics, who barely understand tech, now having an app for each team member which automates booking, service, delivery, inventory, billing, and customer retention.
Or a dry cleaner struggling to break even, now using software which allows them to reduce waste and – for the first time in twenty years – cross a full 12 months with no lost garments (or payouts to angry customers).
And even think about the air conditioning technician who is now armed with a mobile app and an automated voice assistant who takes care of customer relationships, routing, billing, and scheduling periodic maintenance, with all the quirks of the industry or business taken into account.
Founders of boring yet successful SaaS businesses are getting better and better at designing intuitive and deployable software for every individual customer. They must focus on delivering constant value to the consumer – otherwise, that customer may stop using the software. This focus on daily value delivery brings the best SaaS founders closer to the beating heart of their customers’ business.
Whoever said boring was bad?
Sharing is caring!
Source: Startus Magazine
Author: Prasanna Krishnamoorthy