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Software as a Service (SaaS)

An advantaged business model in the technology industry and beyond

Cloud computing and subscription-based business models continue to change the software industry. By the end of 2018 SaaS represented 28% of the total enterprise software market. It is expected to reach 45% by 2023—a significant milestone to achieve in such a short period of time

Customers, vendors, and investors alike are reaping the rewards. Customers are enjoying increased flexibility and lower total cost of ownership. Vendors are seeing rejuvenation in core businesses and moving from stagnation to growth. Investors are happy with higher returns as the market values SaaS companies two to three times higher than their on-premise equivalents.

The SaaS journey is hard. It's a different business model that requires new operating practices. At KANBAN INFOSYSTEM, we've helped numerous clients through the journey. We've helped traditional software companies make the shift from selling on-premise
licensed software to SaaS. We've helped SaaS natives accelerate their performance. And we've helped companies in other industries build SaaS businesses and new value propositions on top of their traditional businesses


Kronos, a workforce management software provider, is undergoing a transformation to SaaS. BCG has facilitated this change.

Reshaping Enterprise Software

This report is based on “ Reshaping Enterprise Software” from Kanban Infosystem Pvt. ltd. It’s been a while since enterprise software was an IT line item. That changed when companies deployed ERP systems and moved software spending to other business functions. Sales and marketing applications that simultaneously added revenue and cut costs raised enterprise software’s profile and budget even higher. Today, it’s hard to find a business function that’s not using multiple cloud-based enterprise software applications—or in some cases, dozens of them. It’s become so entrenched in organizations’ services and strategies that it is now a key differentiator and a core competitive advantage.
As enterprise software’s impact has increased, it’s created an industry that is evolving, interconnected, and complex. It’s also well funded, with a current market capitalization of about $1.9 trillion for just the top 20 value creators, as of the first quarter of 2019. But to prosper, industry players must make choices about strategy, funding, partnerships, spending, and operations and must overcome mediumand near-term challenges in all those areas. The sheer amount of funds raised for startup software vendors is contributing to high valuations and over liquidity at a time of increasing economic and regulatory uncertainty. Software buyers are navigating the adoption of hybrid- and multi-cloud applications, and powering broad digital transformations through artificial intelligence (AI) and related data initiatives. Software vendors are appealing to digitally savvy millennial, who constitute a large portion of B2B decision makers, while analyzing the best options for platform partnerships and addressing data privacy regulations and cyber security threats.Technology service providers are maturing from channel partners to innovation partners. And tech employers of all stripes continue to be dogged by a talent shortage and skills gap.
The business environment has become more dynamic, and organizations must continually innovate and reinvent themselves to remain vital. For industry stakeholders of all kinds, the implications of these and other trends are very real. Either takes action to keep up with how the industry is evolving and continue to thrive in an emerging new age for software, or fail to pay attention and face the threat of new competition or new technology taking over.

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