AI eats Software and more: five key trends in SAAS

Five Key Trends in SaaS for 2024: Navigating the Next Frontier

As the SaaS landscape continues to evolve rapidly, staying ahead of emerging trends is crucial for providers to secure sustainable growth and maintain competitiveness. A recent survey among SAAS players and venture capitalists delving into the most crucial trends highlights a consensus around five key areas that are reshaping the SaaS ecosystem in 2024.

Identified Top Trends

Respondents were asked to identify the threemost important trends driving SaaS growth in 2024. Out of 254 responses, the following five trends emerged as the most significant:

1. Embedded Generative AI
2. Outcome-Based and Usage-Based Pricing
3. ESG Reporting
4. Integration Platform as a Service (iPaaS)
5. Cybersecurity Enhancements

Each of the five trends was referred by more than 50% of respondents, and the most important cluster is genAI/cyber/pricing

Zoom in

Embedded Generative AI: Revolutionizing SaaS Capabilities

Embedded generative AI involves integrating AI technologies directly into SaaS platforms to enhance user experience, streamline operations, and drive innovation. This was quoted by 87% of respondents. The opportunity is to offer a major layer of servitization and solutions to the SAAS product “beyond the open API endpoints”.

Case Study 1: Canva’s AI-Powered Design Assistance Canva, a leading design platform, embraced generative AI to empower users with advanced design capabilities. Leveraging AI models like ChatGPT, Canva introduced AI-driven features allowing users to generate text, animate designs, and edit photos seamlessly within the platform. This integration revolutionized design processes, democratizing graphic design for users worldwide.

Case Study 2: Salesforce’s Einstein Copilot Salesforce, a pioneer in CRM software, expanded its AI capabilities with Einstein Copilot. This multimodal generative AI bot assists users in complex tasks such as customer inquiries, video call follow-ups, and even coding. By embedding AI directly into its platform, Salesforce enhances user productivity and fosters deeper engagement.

Future Trends: As multimodal generative AI matures, SaaS providers will explore innovative applications across diverse domains, from content creation to predictive analytics. The convergence of AI with SaaS will catalyze unprecedented levels of automation and personalization

Outcome-Based and Usage-Based Pricing: Transforming SaaS Economics

Outcome-based and usage-based pricing models depart from traditional subscription models, aligning costs with actual usage or delivered outcomes. The opportunities lies in the fact that AI Saas is fast exploding as a day to day practice creating a major opportunitiy for pricing at usage level. This was quoted by 76% of respondents

Case Study 1: LivePerson’s LiveEngage Platform LivePerson adopted usage-based pricing with its LiveEngage platform, charging customers per conversation facilitated by its AI chatbot. This model incentivizes customer engagement and aligns costs with value delivered, fostering mutually beneficial partnerships.

Case Study 2: Snowflake’s Credit-Based Model Snowflake, a data management company, implemented a credit-based pricing model, wherein customers pay based on actual usage of services. This approach enhances cost transparency and scalability, enabling customers to optimize resource utilization and manage expenses effectively.

Future Trends: The shift towards usage-based pricing reflects a broader industry trend towards value-based monetization. SaaS providers will continue to refine pricing strategies, leveraging data analytics and AI to tailor pricing models to individual customer needs, driving sustained revenue growth.

ESG Reporting: Addressing Sustainability Imperatives

ESG (Environmental, Social, and Governance) reporting entails disclosing non-financial performance metrics to stakeholders, reflecting a company’s commitment to sustainability and responsible business practices. The importance of ESG is also that digitization developments are highly energy- users — and creates suspicions to Saas players. This was quoted by 73% of respondents

Case Study 1: Workiva’s ESG Reporting Software Workiva offers dedicated software for ESG reporting, facilitating seamless data collection, analysis, and compliance with regulatory frameworks. By automating ESG reporting processes, Workiva empowers organizations to enhance transparency and accountability, meeting evolving stakeholder expectations.

Future Trends: As ESG considerations gain prominence, SaaS providers will innovate solutions to support comprehensive ESG reporting and sustainability initiatives. Advanced analytics, AI-driven insights, and interoperable platforms will facilitate data-driven decision-making, enabling organizations to navigate the complex landscape of ESG compliance and disclosure.

Intregration Platform as a Service (iPaaS): Driving Interoperability and Agility

With hundreds of SAAS being used in major organizations, there is a time where a more bundling apporach becomes necessary. iPaaS facilitates seamless integration of disparate applications, systems, and data sources, empowering organizations to enhance operational efficiency and agility. This was quoted by 62% of respondents

Case Study 1: MuleSoft Anypoint Platform MuleSoft’s Anypoint Platform offers comprehensive iPaaS capabilities, enabling organizations to integrate applications, APIs, and data with ease. By providing robust API management and data transformation functionalities, MuleSoft accelerates digital transformation initiatives and fosters ecosystem connectivity.

Case Study 2: Workato’s AI-Driven iPaaS Solutions Workato leverages AI to deliver self-service iPaaS solutions, enabling users to create complex workflows and integrations without extensive coding. With a focus on automation and user-friendly interfaces, Workato democratizes integration, empowering organizations to adapt to changing business needs rapidly.

Future Trends: iPaaS will continue to evolve, driven by advancements in AI, machine learning, and cloud technologies. Enhanced support for multi-cloud environments, real-time data processing, and event-driven architectures will enable organizations to achieve seamless interoperability and orchestration across hybrid IT landscapes.

Cybersecurity Enhancements: Safeguarding SaaS Assets

Cybersecurity enhancements encompass proactive measures and technologies aimed at protecting SaaS applications and data from evolving threats and vulnerabilities. This was quoted by 61% of respondents

Case Study 2: Vectra AI is anAI-Driven Threat Detection and Response SaaS provider which leverages AI and machine learning to augment threat detection and response capabilities, enabling proactive identification of anomalous activities and rapid incident response. By harnessing AI-driven insights, organizations can enhance threat intelligence, automate security operations, and fortify their defenses against emerging cyber threats.

Future Trends: The proliferation of cloud-native architectures and distributed workforces will drive demand for innovative cybersecurity solutions tailored to SaaS environments. Predictive analytics, zero-trust frameworks, and AI-powered security orchestration will empower organizations to proactively address emerging threats and safeguard their digital assets effective