What’s in store for SaaS Businesses at SaaStr Europa 2019?

Renat Zubairov embedded integration platform

With the second annual SaaStr Europe around the corner, we are getting ready to head for Paris and join fellow founders, developers and specialists in the B2B SaaS community.

Flights booked…check! Demos ready…check!

SaaStr Europa is Europe’s largest gathering of people that are passionate about software development and integration on a cloud platform, and we are keen to get our heads together on the latest trends, innovations and challenges in the industry.

A report by TMR provided a positive forecast for adoption of iPaaS in European markets, which we are certainly seeing come to fruition. Between 2017 and 2022, the iPaaS market in Europe is estimated to grow at an impressive CAGR of 11.4%. Globally, the forecast for iPaaS amounts to nearly US$ 800 million in global revenues.

Here, I share my thoughts on three hot topics that we think will be under discussion at the event:

How to make SaaS a subscription success

Software developers may know how to make great software, but it is a different challenge to make it a commercial success. Two factors usually hold the key: scalability and economics.

The first is part of the build, but the second relates to the operational feasibility of the software model, by which we mean the ‘leading indicators’ of success. And that is the issue of economics facing the SaaS industry today.

As seen with the IPOs of Lyft and Uber so far this year and the valuation of companies such as Tesla, success is not as simple as profit and loss any more. Here, stock price is driven by current financial KPIs but also expectations and hopes of the future, and the same is true for SaaS companies. For example, when a SaaS business signs a new customer with multi-year subscription contract just before the close of the financial year, only one month of the revenue might be visible in the books. KPIs for SaaS businesses need to take into account that revenue is spread over a longer period and is at risk of being decayed by costs of integration, customisation and maintenance over its lifetime. This leads to a new set of ‘leading indicators’ being applied to the SaaS model, reflecting a wider understanding of the industry economics in order to analyse and predict the performance of subscription-based businesses.

Lowering the burden of application integration and customisation

Another commercial challenge facing the software development industry – SaaS in particular – is the burden of application integration on the overall cost of customer acquisition. Employing specialist integrators adds an expensive and time-consuming layer to the process of software development. The knock-on impact on commercial viability of the software after all of this is taken into account can impact on how – or even whether – the product is brought to market, and which customers are targeted for sales.

Extending iPaaS adoption to new market sectors

The advantages of iPaaS exist for all sizes of organisation where masses of data are collected through disparate platforms, moved around and between departments and business functions, and need to be controlled with care.

On the user side, few organisations have dedicated application integrators on the team so the cost of streamlining the software infrastructure is heavily augmented by bringing in a specialist to do the job. As companies adopt more and more SaaS products within the enterprise, the challenge of integrating solutions and maintaining data integrity grows.

But issues also exist on the side of the software supplier. Without iPaaS to provide a seamless, unified path to integration, SaaS suppliers recognize that the cost of acquiring each customer makes it uneconomical to support a high number of smaller companies over a small number of larger customers. Since integration can be a significant part of customer acquisitions, lowering this contribution will open new markets for exploration. We’re looking forward to discussions over these topics and more at SaaStr Europa. Let us know if you’ll be there and what you are looking forward to seeing. Or you can book a meeting with us.

About the Author
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Renat Zubairov

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Renat Zubairov is CEO and co-founder of elastic.io. He is an experienced hacker, product owner and agile evangelist. Renat is a speaker on international conferences, user groups and active open source community member. During his career Renat was working with world best companies like Nokia, Nokia-Siemens Networks, TCS and DHL. Last 5 years he has been working in product start-ups in Application Integration, Data Integration and Business Process Management areas. Leading development of Application Integration (ESB, SOA) product.

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