SaaS sector continues to grow; investors move in rapidly
(FinancialPress) — As the Software as a Service (SaaS) sector continues to gain traction and fills the headlines of some of the largest digital business publications – such as Forbes, TechInAsia, Investors.com –, investors find themselves more and more attracted to learn and place their capital in the trending tech sector.
SaaS, acronym for Software as a Service, is the name given to products developed and hosted remotely by a third party. Customers purchase access to the platform of their preference, mostly via a monthly subscription, and get integral business solutions that are remotely hosted, can be scaled up or down or modified to fit their needs, and provide high-end client support. The highly flexible market has been linked to a valuation forecast of $76 billion by 2020.
The use of SaaS solutions is on the rise in 2018 – as businesses choose cloud-based solutions that allow them to focus on their own operations instead of extensive on-site setups that require additional manpower and downtime costs, as well as periodical maintenance. SaaS‘ characteristics allow to drastically lower those expenses, delegating such responsibilities to the provider. Cisco’s Global Cloud Index for the 2013-2018 period highlights that 59% of all workflow will be SaaS-based by the end of 2018.
Other major advantages of the technology include the lack of need for physical server space, and instant rollout of upgrades and customizations by the host without having to go through update downloads and new version installations.
All of these factors also spell revenue for the provider – installation, setup, hosting, bandwidth allocation, end-user training and, of course, subscriptions, are only some of the vast profit-making avenues that app developers in this sector enjoy. Companies can present their clients with a menu of options and scale their operations up or down according to what is requested – therefore making any increase in operational costs almost surgically calculated to be offset by new income.
This new wave of innovation and its upsides have not gone unnoticed by big tech stalwarts. On Sunday, IBM disclosed the acquisition of open-source cloud-based software solutions developer Red Hat, in a bid to stay competitive with perennial contenders Microsoft and Amazon. Even companies that have been historically geared towards commercializing Infrastructure as a Service, such as Oracle, could soon begin to ponder a switch to the software-oriented market.
Promising forecasts, sustained growth over time and the incursion of tech‘s biggest players into the field, provide a solid foundation for institutional and individual investors to follow the trend. News of companies such as Syncron, a SaaS that helps companies move to a service model, raising $61 million in a single funding round, or Careem, a Dubai ride-hailing service, securing $200 million in funding from Saudi and Japanese investors, continue to flood headlines.
While those price tags may seem outlandish for the private individual investor, news such as Subscribe Technologies‘ (CSE:SAAS) full acquisition of webinar-launching platform WebinarIgnition (LINK TO PR) are the kind that they must be on top of to reap the benefits of the burgeoning market, while placing their capital in an affordable manner. It was revealed on Monday that SAAS purchased the entirety of the integral webinar solution company for the equivalent of $50,000 between cash and stock.
Subscribe Technologies develops, partners with, acquires, and invests in cloud-based SaaS solutions for small and medium enterprises. After the acquisition, they will market the platform to WordPress users as well as through Gingerly – their fully-owned cloud-operated business management suite, which they believe has the same demographic as the new asset.
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