First of all, there will be bad news this year: The market for SaaS (software as a service) is maturing. It is expected that economic growth will cool down. According to a report, artificial intelligence is threatening the key pricing model on which cloud services are built. But there is also good news. Analysts say that SaaS vendors are applying the same artificial intelligence to their applications to make them smarter and more effective. Although the market will become more rational, many companies are expected to shift their software systems to the cloud, which means that there is still much room for growth. Gartner analyst Jay Heiser said that not long afterwards, almost all applications will run in the cloud, not on local devices or on local servers. "We have gone through a 40-year journey. No one knows what the end point will look like," he said, adding that computing technology after 20 years would be "as alien to us as aliens", just like In the 1990s it was impossible to imagine how we now use web browsers. He said: "If you start to feel strange now, then the future will become even more strange." 2017 is a year for SaaS—Salesforce’s sales cloud, Microsoft’s Office 365, and Google’s GSuite—all of which are stored in the cloud, not on the hard disk. Large software companies like Google and Microsoft have demonstrated their ability to deploy SaaS applications in the enterprise. Smaller SaaS companies like the workplace collaboration APPSlack can also generate revenues—Slack claims that its annual recurring revenue exceeds $200 million, and 2 million of the 6 million users are paying members. Analysts are now plotting a mixed picture for 2018: a gradually mature SaaS market, the pace of development is slowing, but it will not stand still, and there is still enough room to continue adopting cloud services and based on its On the software. A recent report by BetterCloud, SaaS operations and management company, shows that by 2020, approximately 73% of companies want to transfer almost all applications to cloud-based services. According to a report released by IDC International Data Corporation in November, the SaaS sector, which accounted for 68.7% of the total cloud market share, was the slowest growing segment in the cloud market, up 22.9% year-on-year. TechCrunch reported late last month that venture capital investments by SaaS startups have dropped significantly, showing another sign that growth will slow. In 2014, the company that claimed to be SaaS received nearly 5,000 financings. TechCrunch's data shows that this figure dropped by nearly 40% last year to about 3,000 people due to the decline in market saturation and that SaaS startups must compete with mature players in the SaaS space. SaaS market has matured It is expected that SaaS will continue to grow in 2018, but the speed will slow down. One reason is that many companies have adopted SaaS solutions, especially in customer relationship management (CRM) and human capital management (HCM) and financial applications. Analysts said that all this means that the SaaS market is entering a new and more mature stage. Many corporate customers have completed simple tasks—identifying applications that can be successfully converted to cloud models—and they are already in the early stages of development and are converting these applications into SaaS products. The next step will be more difficult. In 2018, these customers will assess how to move their larger software systems, such as enterprise resource planning (ERP) and supply chain applications, to SaaS. IDC said that these large enterprise systems will provide strong momentum for the strong growth of the SaaS market next year. Despite this, Gartner analyst Heiser said that there are several industries that are less obsessed with adopting SaaS, such as hospitals and manufacturing. Heiser said the reason is that these customers are still worried that the SaaS system may go offline, fail, accidentally shut down the medical system or factory floor. He said: "These consequences are very serious. If something goes wrong in the hospital, the patient may die." He said that this means that SaaS has different development trajectories in these industries, and patient bills or customer relationship management may occupy a more important position in them. Heiser said that in the coming year, additional SaaS growth areas include back office systems and records systems. He said: "The enterprise IT department will welcome this plan more." In addition, Heiser said, it is expected that SaaS systems will become more complex and will gradually transform into more service-oriented platforms because companies need more flexible cloud-based applications that can be easily customized. The rise of artificial intelligence Analysts said artificial intelligence will significantly change SaaS products in the coming year. According to a report published by Gartner last year, artificial intelligence is beginning to threaten SaaS vendors' pricing models. According to the report, as more and more customers deploy their own artificial intelligence, the number of employees who use the software will decrease, which means that the revenue of suppliers who charge by the amount of users will decrease. Gartner exemplifies an "increasingly common" scenario: a top tier e-commerce company layoffs and deploys chat bots, but it will not be deployed in all customer services, only a small fraction. But the question is, can SaaS providers include the cost of robots into the billing model as well as the cost of employing customer service? May not be. Gartner's analyst wrote in the report: "User pricing will be under pressure and therefore will seriously damage the interests of SaaS suppliers." "The idea is significant and far-reaching. Software vendors have the risk of losing most of their users." Gartner said that by 2025, 40% of software currently priced per user will be redirected to other pricing models to avoid losses. The emergence of artificial intelligence will also bring more positive development. Almost every major cloud service provider and SaaS company applies artificial intelligence to their products, creating an "AI as a service" segment. Because of big data and machine learning, customers can expect a more intuitive, voice-enabled user interface and customized, increasingly useful search results. Heiser uses Adobe Sensei as an example. It is integrated into Adobe's cloud technology application. It uses deep learning to recognize faces, edit photos, and search. For example, it can search out all photos containing barns from many photos. In addition, more SaaS providers will take advantage of plug-and-play machine learning APIs provided by major technology companies such as Google and Microsoft, said Rhett Dillingham, senior analyst for cloud services for Moor Insights & Strategy. He said that success will belong to SaaS companies that can quickly deploy artificial intelligence to reshape the customer experience and provide better search and advice. Gillingham said: "This will help distinguish winners and losers. The lesson of digital trends is that user experience is king." "SaaS vendors who deploy artificial intelligence through machine learning will be successful in 2018 and will continue to thrive."
