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Promise of a progressive future for the enterprise

As digital transformation continues to accelerate across the globe, the SaaS industry can only get stronger, backed by the kind of ideation that provides a simpler, smarter future for all.

The wide adoption of software-as-a-service (SaaS) applications for enterprises is becoming an industry standard. Much of this can be attributed to ongoing business digital transformation and the general acceptance of automated business operations.

SaaS is a software distribution model that offers a lot of agility and cost-effectiveness for companies, making it an incredibly reliable option for numerous business models and industries. It is also popular among businesses due to its simplicity, user accessibility, security, and widespread connectivity. In turn, Saas platforms streamline business models, resulting in maximum efficiency across the board. Today, most companies are in the process of implementing various business intelligence strategies, turning to SaaS BI tools to assist them in their efforts.

It is becoming an increasingly viable choice for organizations in search of accessibility, functionality, and versatility in a cut-throat business environment. It is possible for companies to run SaaS software solutions and online data analysis without the need to rely on installing and running applications on their own computer systems and data centers. As such, these incredible innovations are rising in popularity every year.

The SaaS market is going to get bigger and bigger. As per Reporterlink’s Cloud Computing Market by Service 2021 report, the SaaS market at present is growing 18 percent each year. The same report also observes that 70 percent of all CIOs agree that agility and scalability are the key motivators for using SaaS applications. Additionally, SaaS solutions enabled organizations to access data, providing a flexibility and convenience required for today’s hybrid workforce.

In January 2021, Gartner predicted enterprise SaaS spend would grow by a stunning 10.2 percent next year with unprecedented levels of growth for business software in the enterprise. They company has now updated that and predict an even further, and stunning, acceleration in enterprise software spend in 2022 – now up to 11.5-percent growth.

Put differently, Gartner after surveying 2000 CIOs is now projecting enterprises will spend USD 110 billion more on enterprise software in 2022 than they predicted just in January. In January, the prediction was USD 557 billion in spend for 2022. Now, 10 months later, with more data, this has been revised upwards to USD 669 billion. Albeit, this number includes a lot of infrastructure software, which Gartner says will outpace application software. But still.
And in December 2021, the prediction for end-user spending on SaaS services is that it will exceed USD 171 billion by 2022.

As the first cloud service to truly take off, SaaS has a significant lead on other cloud services. Gartner estimates that SaaS will continue to maintain this dominance well into 2022.

Worldwide public cloud services end-user spending forecast (USD million)
2020 2021 2022
Cloud Business Process Services (BPaaS) 46,066 51,027 55,538
Cloud Application Infrastructure Services (PaaS) 58,917 80,002 100,636
Cloud Application Services (SaaS) 120,686 145,509 171,915
Cloud Management and Security Services 22,664 25,987 29,736
Cloud System Infrastructure Services (laaS) 64,286 91,543 121,620
Desktop as a Service (DaaS) 1,235 2,079 2,710
Total Market 313,853 396,147 482,155
BPaaS = business process as a service; laaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Totals may not add up due to rounding.

Gartner (August 2021)

The SaaS growth rate, however, is beginning to slow, especially compared to other cloud services like platform as a service (PaaS) and infrastructure as a service (IaaS), both of which are projected to double from just 2020.

We can also look at SaaS success in terms of the companies that make those products. In the first part of 2021, the 10 largest publicly owned SaaS companies per market cap were Workday, Zoom, Snowflake, Atlassian, Square, Servicenow, Intuit, Shopify, Salesforce, and Adobe.

Notable industry giants that are missing from this list include Microsoft and Oracle. It is important to realize, however, that a significant portion of their revenue comes from selling on-premises software – so while they are huge tech companies, calling them SaaS providers is a misnomer.

This demand for subscription-based pricing models, however, is spurring legacy companies to rapidly migrate their software solutions to a SaaS consumption model.

The enterprise SaaS market will see transformational changes in the coming year. Organizations seeking to increase their enterprise SaaS applications adoption, while the required custom solution is not available, working with their provider is a path worth exploring.

Three trends are emerging:
Consolidation in the SaaS industry will continue. The acquisition frenzy is not over. Tech giants will continue acquiring smaller companies to gain a significant part of the market share, exponentially expanding their solutions and offerings to keep a competitive advantage.

AI will be a critical enabler of personalization, efficiency, and best-in-class experiences. Analytics, optimizing the customer experience, and sourcing new revenue channels will drive the future of work forward as organizations begin to see vastly expanded use-cases for AI across consumer-centric industries like retail and banking. At a macro level, machine learning and predictive analytics will detect patterns and trends that will power solutions for the labor shortage and supply chain challenges.

Growing enterprise budgets and the rise of product-led growth companies will force greater collaboration between IT, end-users, and product leaders. CIOs are witnessing a significant increase in their budgets, meaning the enterprise buying pattern will evolve to a bottom-up approach accounting for product-led growth (PLG) organization technologies that are gaining traction among the end-users and the pivot to remote work. Product leaders at PLG companies will bear some responsibility for developing SaaS products with security and control requirements baked in out the gate or will find themselves unsuccessful. IT, end-users, and product leaders will sit at the same table.

Undoubtedly, enterprises take on a level of vulnerability when leveraging SaaS solutions. Because most SaaS platforms operate through cloud computing and networking, data centers and IT infrastructures could face an increase in cyberattacks. These concerns will rise as the IoT and 5G adoption introduces new vulnerabilities.

The lack of awareness that SaaS customers have when it comes to security obligations, and/or the procrastination to address these responsibilities, should be a cause for concern.

Many of the SaaS vulnerability assessments reveal accounts with over-provisioned external SaaS users. Additionally, in each SaaS environment, typically many have access to sensitive data but have not been used in over six months.

In any other security context, the over provisioning of a guest user who has access to sensitive data to be a high-risk issue is worthy of correcting immediately. A third-party integration connected without a purpose, yet accessing critical business data, needs to be deprovisioned. And any issue that leaks the data to the anonymous internet, potentially even pulling in the IR or legal team to assess the feasibility of a response be locked down. In no other security domain would any of these outcomes be remotely acceptable to a security team. And yet when it comes to SaaS, all of these situations are commonplace.

For one, enterprise executives were told early on by some of this generation’s best salespeople that SaaS platforms were the answer to the constant security concerns that accompany on-premise applications.

In reality, this is partially true. SaaS applications are provided with security built-in to the provider’s architecture, are hardened by some of the best security professionals in the industry, and go through rigorous testing.

However, there are parts of the SaaS ownership model being wholly mismanaged – and that mismanagement is happening in the configurations that we as end-users are responsible for.

In fact, Gartner states that through 2025, 99 percent of cloud security incidents will be due to issues that are the customer’s fault. Over the last few years, cloud misconfigurations are detrimental to our security posture. Same must be done for SaaS applications.

There remains a fear of turning over the SaaS security stone as it could expose outcomes that will necessitate more work, more budget, and more anxiety. But ask any company that has suffered a cloud data leak, and they will tell you that it is better, and cheaper, to be proactive than to react to bad news urgently, ruining the employees’ roadmaps and begging for budget to solve a highly predictable problem looming on the horizon. Modern security teams know that the time to act is before an incident has occurred.

The good news is that there is momentum right now to build security controls into the SaaS deployment. Many organizations have enabled a hybrid approach within appsec that builds security into the deployment process. These practices are cost-saving, efficiency-building, and more importantly, culture-boosting. There is no reason that organizations should stop proactive security at application security – rather, building these practices into the management of critical SaaS applications and cloud infrastructure is sure to be the best-practice approach in coming years.

SaaS security management and governance are necessary for an enterprise’s cyber defense and should be a key focus area. Data and identity protection and monitoring of applications are important to ensure that right set of security controls are applied and defined.

Also, well-defined enterprise processes, security controls, and adherence to compliance requirements can improve the security posture.

Overall, the rise of SaaS solutions is not going anywhere. Both small and large businesses are utilizing SaaS in some form, and as these options continue to expand, this percentage will only increase.

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