Nearly 300 years. Four advancements. Three industrial revolutions – and the start of another – that have transformed society. As we enter the fourth industrial revolution, we analyze the part played during the relatively brief but colorful history of SaaS.

From steam to SaaS: Eras of new and accelerating change

The first industrial revolution heralded an age of mechanical production. Steam engines powered locomotive transportation to expand travel, commerce and the sharing of information. Above all, agrarian societies became urbanized. Gradually, human craftsmanship was replaced by industrialized manufacturing and factory mass production.

The second was dubbed the “age of synergy.” Advances in science and engineering extended the progress of industrialization. These included improvements in electrical power and distribution, and the replacement of coal with denser energy sources. As a result, telephones, rail, steel, iron, rubber and petroleum production all made their marks.

 

 

In newly industrialized countries, productivity increases drove down the price of goods. This in turn helped trigger the greatest increase in standard of living the world had ever seen.

Then, a third revolution. Most noteworthy were the breakthrough shifts from analog to digital. An Internet-age had arrived, which transformed global communications, energy, financial services, personal computing, manufacturing and social connectivity.

This accelerated the development of efficient solar technology, P2P financing, 3D printing, and the ubiquity of personal devices. These are just some of the many paragons of progress from this spectacular time.

The history of SaaS begins

History-of-SaaS

Software-as-a-Service (SaaS) was born during this era. An extension of Application Service Providers (ASPs), SaaS evolved from the growing need for centralized computing. The rise in broadband internet connectivity and the expensiveness of data storage (especially in an age of ‘bloatware’) also played their part.

Salesforce’s “The End of Software” campaign in 2000 and Concur’s resistance to floppy disk and CD-ROM production were the industry’s coming-out moments. These invited a world of app services delivered via the internet. And this led to an explosion in cloud-computing for the everyday person and inexpensive, web-based business licensing models.

As a result, common SaaS apps evolved to fit a range of budgets and use cases. These include collaboration, CRM, customer support, procurement, analytics and business intelligence. Other near universal SaaS experiences are finance/accounting, ERP, budgeting, planning and software development functions.

As is now clear, their success is down to SaaS’s fundamental premise. The provider - not the user - is the one who hosts, maintains and supports the application.

Industrial Revolution’s next chapter

Today, society sits in the earliest days of a fourth revolution. Dubbed, Industry 4.0, it is known by the hyper-advancement of technology and experiences that began in the later stages of the third revolution.

Smarter and more efficient machines, systems and software are changing the dynamics of work and play at unprecedented speeds and in non-linear ways.

These innovations are fueled by data. This includes not only the inexhaustible supply created by all-digital-everything apps and consumer experiences. It also encompasses company initiatives to tag, bag and share that data – and turn it into actionable insights.

Data flow and access create strong competitive advantages. For example, the Economist famously called it the world’s most valuable resource, the “new oil”, and admonished careful control of its use.

Beyond this, other experts forecast the history of SaaS to become increasingly rich and diverse. Historical investments in application support functions, or the ‘picks and shovels’ of digital innovation, will finally pay off.

Factors supercharging SaaS growth

APIs now facilitate data sharing without wasting time on code creation. Platform-as-a-Service (PaaS) offerings deliver frameworks to developers for creating cloud-based software. As a result, they no longer need to worry about operating systems, software updates, storage and infrastructure.

Moreover, PaaS fosters collaboration for development teams, no matter where in the world they sit. This creates a virtuous cycle of contribution, development innovation, success and improvement.

Infrastructure-as-a-Service (IaaS), on the other hand, delivers cloud computing infrastructure through virtualization technology. This includes servers, networks, operating systems, and storage. AWS, Azure and Google Cloud accelerated SaaS commercialization by reducing barriers to entry for software startups.

According to Diginomica, IaaS offerings “made it possible to launch a software business essentially on spec, without having to invest any more than a few cents in servers, paying only to the extent they were used.”

In a previous review of SaaS trends, we highlighted Oracle research on how the software development community would expand by 10x, with productivity improving by 400%. SaaS has indeed lived up to this promise, with a menu of attractive new apps for business and consumer markets.

New, next steps

As NoSQL databases make data analysis easier, JavaScript environments like Node democratize app development. Advances in artificial intelligence promote smarter, mission-critical applications. And BYOD trends blur the lines between personal and corporate digital connections. This is all causing SaaS to multiply.

For example, Cleanshelf’s industry-ranging State of Business SaaS Spend report for 2019 reinforces this. Report findings suggest that:

  • The typical employee uses 44 apps to do their job.
  • The annual SaaS spend per employee totals to more than $13,000.
  • The typical 800-person US company deploys 141 SaaS apps across the organization.

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With the SaaS industry steadily growing, it is set play an increasingly important role in powering the fourth revolution we are experiencing. Therefore, as the market continues to mature, the impact on enterprises will be as wide-ranging as it is forceful. As history shows, disruptive advances invite both chaos and challenge, alongside productivity and growth.

So, there you have it for the first part of our look back at SaaS! Stay tuned as we explore what the history of SaaS means for the future in our next blog post.

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