1.1 Market definition
SaaS - "software as a service" - is a new software distribution model. Two characteristics distinguish SaaS from traditional software: remote use and price.
In the case of traditional software, it is used as a physical product, of which the user acquires definitive ownership on purchase. The purchase of the Office Family Pack is a typical example of this first type of software.
SaaS, on the other hand, is used remotely, with variable pricing. According to GartnersaaS can be defined as "an application that is owned, offered and managed by one or more vendors. The provider offers this application on the basis of a set of codes and definitions relating to the data used, based on a "one-to-many" model. one-to-many " model, with revenues indexed to frequency of use or generated on a subscription basis. Salesforce and SAP are among the best-known and most widely used examples. SaaS is therefore not used as physical software, but as virtual software used as a service through the cloud.
However, understanding the SaaS market remains variable, given the complexity of the services offered by software publishers.
Two approaches are possible:
- SaaS is seen as a software product in its own right, meeting a specific business need, such as human resources management. SaaS is then an integral part of the cloud computing system.
- When it comes to marketing, SaaS is seen as an IT solution that can be marketed in the same way as hardware (a computer) or a service (consulting, for example), but as a subscription rather than an acquisition.
In the first approach, SaaS is the ultimate pillar of the three elements used by cloud computing. The aim of cloud computing is to make computing or storage capacity available to users, whether private or public, remotely. SaaS thus complements the other two pillars of cloud computing. The first is infrastructure - or "IaaS" (Infrastructure as a Service) - which is required to set up a remote network. The second, the platform - or "PaaS" (Platform as a service) - enabling the establishment of a dedicated environment for hosting the software that SaaS represents.
From this perspective, SaaS is the heir to application services, known as ASP (Application Service Provider). SaaS orchestrated a fundamental difference from its predecessor, whose principle was to install and use applications directly on a computer. By revolutionizing the use of applications via the Internet, SaaS has not only changed the way applications are used - the main benefit of which lies in their remote use - but also the possibilities for integration and partnership.
From a commercial point of view, SaaS is integrated into the software segment, and is therefore one of the three traditional segments of the IT industry, alongside hardware (i.e. computer, mobile) and software.i.e. computer, mobile) and services (i.e. management consulting and database integration). The software segment covers networking, development and usage applications. These applications are either physical (traditional software) or remote (SaaS).
SaaS is designed for both private and professional use. In this context of professional use, SaaS supports companies across the entire value chain. Several categories of software are commonly distinguished:
- Enterprise resource management (e.g. accounting, suppliers). This software is known as ERP - Enterprise Resource Planning;
- Customer relationship management (e.g.: relationship history). These are known as CRM - Customer Relationship Management;
- Product management (e.g. after-sales service, localization). These are known as PLM - Product Lifecycle Management;
- Office automation (e.g. spreadsheets);
- Design (e.g. computer-aided manufacturing).
By 2021, 45% of software sales will be generated by SaaS. This percentage is set to increase at the expense of traditional software, for a variety of reasons (lower cost, more practical, etc.).
1.2 A fast-growing global market
evolution of worldwide SaaS revenues World, **** - ****, in billions of dollars
The global SaaS market is estimated at $***.** billion in ****, and is expected to grow at a CAGR of **.*% over the period ****-****, reaching over $**** billion by the end of this period. The growing use of mobile devices and artificial intelligence ...
1.3 The French market: a dynamic market with great potential
The SaaS model, a segment of the software market, is growing in popularity in France. In ****, **% of software sales will be generated by SaaS, whereas in ****, this segment represented only **%[***].
The market for SaaS solutions France, **** - ****, in billions of euros Source: ****
The French SaaS market has been enjoying sustained growth ...
2.1 Large companies, the main customers
Demand driven by industry, the public sector and finance
As the SaaS market's main outlet, the private sector (***) represents the main development opportunity for software suppliers. From the outset, SaaS software has been designed to optimize and facilitate the management of day-to-day business activities, such as accounting and product management.
2.2 Demand driven by the democratization of cloud computing
First and foremost, this democratization requires high cloud software penetration rates. Certain sectors are more or less sensitive to the use of this type of software, but overall penetration rates are significant:
Office cloud software penetration rates by sector France, ****, in % of companies INSEE
in the transportation sector, for example, the ...
2.3 SaaS: an internationalized service
A large proportion of software publishers' sales, **% of which are generated by SaaS solutions, are generated abroad:
Breakdown of software sales by geographic region World, ****, in Source: ****
Indeed, foreign sales account for **% of the total, down slightly from **% the previous year. This proportion has remained relatively stable over the past five ...
2.4 Demand drivers: the subscription contracting method
As explained earlier, one of the advantages of the SaaS model is economic. Indeed, the subscription format appeals not only to customers, but also to publishers. This explains the resilience of the SaaS market during the pandemic.
Software publishers' preferred method of contractualization France, ****, in Source: ****
In fact, **% of the *** software ...
2.5 Demand drivers: customer relationship management (CRM)
Customer relationship management is part of a policy of mastering customer knowledge and monitoring customer exchanges. While the latest software products combine these two practices, there are also contact centers that make the most of the data they collect, and support their customers in their decision-making thanks to steering tools, key ...
2.6 Barriers to SaaS demand
As SaaS solutions are not perfect, it's important to point out the few drawbacks of this model that are likely to dampen demand. These include[***]:
the need for a good Internet connection: no offline use, so the company is entirely dependent on the quality of the connection; strong dependence on the ...
3.1 SaaS market value chain
3.2 The software market: a fast-growing market
A first positive sign for the SaaS market is that software publishers' sales are rising sharply, which testifies to the dynamism of demand on the software market (***):
Trend in total sales for software publishers France, **** - ****, in billions of euros Source: ****
The software market has indeed seen significant growth since ****, with ...
3.3 A segmented software market
Among software publishers, it is possible to distinguish between sector-based publishers (***) and individuals and games, representing a very small share of the publishing market. The breakdown of players in the software publishing market is as follows:
Sales by publisher category France, ****, in billions of euros Source: ****
Sector-specific publishers are the biggest ...
3.4 R&D, cybersecurity, CSR, recruitment, external growth and distribution: current market challenges
Research and development
Innovation is a top priority for French software publishers, as evidenced by their significant investment in research and development (***). Indeed, they devote **% of their sales to R&D, and a third of their total workforce is dedicated to these activities:
Evolution of R&D workforce as a percentage ...
3.5 Interview with Alex Delivet, founder of Collect
Marine: Welcome to the Niche, the podcast that analyzes the niche market with the entrepreneurs who are shaking things up. I'm Marine and I work at Businesscoot, the start-up that's dusting off market research. Before you start, subscribe to our podcast on Spotify and Apple Podcast. And now for today's niche: ...
4.1 From product price to service price
SaaS implies a new way of pricing
In their ADP versions, software followed a traditional pricing logic: the software end-user paid a fixed price upon acquisition.
The development of the cloud has brought about a fundamental shift in software pricing, for two reasons.
Firstly, the flexibility, scale and interaction offered by ...
4.2 A protean SaaS software offering
It's important to differentiate between the three layers of service offerings that can coexist today:
IaaS (***): basic infrastructure in the form of computing, storage and bandwidth capacity. It's an offer aimed at businesses, but above all at application service providers. Amazon Web Services is typical of this category, with its offer ...
4.3 SaaS software offerings and inflation
The SaaS market is no exception to the high inflation experienced by French consumers over the past two years. **.**% of SaaS software increased its price between **** and ****.
SaaS price increases by subscription type France, **** - ****, as % of total Source: ****
Software prices rose by over *% on average between **** and ****, slightly more than ...
5.1 Regulations governing SaaS
As a processor of its customer's personal data, the SaaS software publisher has a great many obligations with regard to Regulation EU ****/*** of the European Parliamenten and of the Council of April **, **** on the protection of individuals with regard to the processing of personal data and on the free movement of ...
The SaaS market can be divided into three categories:
Leaders. This group brings together the market's historical players, who developed the first computerized management solutions for businesses from the ****s onwards, and have gradually made their offerings more complex. Most of these companies are American, and offer generalist services. Adapting their ...
6.2 Summary of key points
The French SaaS market has experiencedsustained growth since ****, with a clear acceleration from **** onwardsto reach record sales of* billion in ****, compared with *.* billion in **** and *.* billion in ****.
Lhe private sector accounted for **% of Saas sales in ****. Industry (***) are the main private-sector outlets. The public sector accounts for **% of demand.
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