The Expanding SaaS Sector and What That Means for You

SaaS Sector  

Coming back from the annual SaaStr mega conference in San Francisco, it is clear that SaaS is huge, it is expanding and it is going to impact companies both in the United and States and abroad.

The Expanding SaaS Sector

The rapidly expanding SaaS sector numbers something like 10,000+ revenue-earning vendors.    While the majority of SaaS vendors won’t achieve the mega exits dreamed of by SaaS entrepreneurs, the SaaS model is changing the way the world does business.   

SaaStr did a good job of furthering the discussion of how SaaS best practices for sales, marketing, customer success, finance, and overall operating success are evolving.  There isn’t a SaaS playbook  that all companies can follow blindly, because different SaaS business models require different playbooks but there are some common themes that can be applied to any company building a SaaS growth company today.  2018 promises to be a year when we will hear much more talk about productivity and efficiency, plus channels and new markets.

We learned that SaaS is not just limited to US vendors and the US is not the only significant market for SaaS products.  Walking the halls of SaaStr (actually, squeezing thru the crowds), different languages, and accents of English could be heard interspersed with occasional English buzzwords like: account-based selling, customer success, and of course, SaaS.

While the vast majority of public SaaS companies still have headquarters in the US, Atlassian, an Australian based SaaS company, had a very successful IPO and their unicorn status gives hope to other non-US based SaaS vendors that they too can be successful or even dominate a world market.  Some of the countries represented at SaaStr this year were: Australian, New Zealand, British, Indian, German, Dutch, and French. And, that doesn’t cover all the countries whose companies were there.

European Funding of Start-Ups

According to a recent report from Tech.eu, European startups raised USD $31 billion in 2017, up nearly 53 percent from 2016. However, the money was going to slightly fewer companies. The number of deals in 2017 declined by about 2 percent.  This would mean that more money was being invested per company – investors are placing bigger bets in Europe.  European start-ups will have more money to build and expand worldwide.

EMEA Tech Spending to Exceed $ 1 Trillion

Gartner projects enterprise spending on IT products and services in the EMEA region (Europe, Middle East and Africa) will exceed USD $1 trillion this next year. That represents a 4.9 percent increase over 2017 spending. A strong demand for enterprise software and IT services represents a portion of that growth. Gartner says 2017 spending declined 1.4 percent from what was originally expected. Gartner predicts that all categories of enterprise IT spending will return to growth in 2018, but that IT services and software will grow strongly at 4% and 7.6%, respectively.

US SaaS Companies Need to Pay Attention to Changing EU Privacy Regulations

The EU’s General Data Protection Regulation (GDPR) goes into effect in about six months, and there are going to be many changes that will impact US SaaS companies. A survey of more than 300 attendees at VMWorld 2017 by security firm HyTrust, found that 51 percent of SaaS vendors were either not concerned about GDPR or unaware of its relevance to their business. More than 25 percent of the respondents said they were concerned about GDPR but had no plans in place for compliance.

The biggest change to the regulatory landscape of data privacy is it now applies to all companies processing the personal data of people residing in the Europe, regardless of the company’s location.   This affects:

  • credit card processing (if there is a European address), billing and invoicing,
  • HR records
  • Contracts
  • and even IP addresses if your application collects or tracks IP addresses

If your company is not in compliance, you can be fined of up to 4 percent of a company’s annual revenue or nearly USD $25 million for violations. The conditions of consent must now be clear, easy to read, understand, and easy to withdraw.

Bottom line for US companies, pay attention and stay on top of EU privacy regulations or face penalties, and possibly lose market share to European competitors who are on top of the regulations.

Tracking for the 2018 Playbook

The expanding SaaS sector is good for most SaaS companies and good for growth.  Customers will be more accepting of Cloud-based services and products, not just in the US, but also throughout the world with more vendors paving the way. 

At the same time, competition will continue to rise and require companies to execute carefully and efficiently.  Benchmarking is the best way to ensure that your company tracks to the changing playbooks and uses its resources efficiently.  Contact us at info@opexengine.com to find out how you can quickly benchmark your key SaaS and operating metrics to peers and market leaders.

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