What is SaaS? Why is the B2B SaaS market so popular?
In recent years, the SaaS market, including B2C and B2B, has continued to expand. Many of you may have heard of SaaS in IT news and media, but are you aware of the convenience it provides in our everyday lives? Have you ever wondered about the concept of SaaS, which quietly enhances our daily lives with convenience? In this content, we’ll delve into what SaaS is and investigate the factors driving the growth of the B2B SaaS market.
SaaS, which stands for Software as a Service, is a type of cloud service that hosts applications, platforms, and more that are delivered to customers simply over an internet connection. It is a model in which the cloud provider develops and maintains the cloud application software, provides automatic software updates, and delivers the software to customers over the Internet on a pay-as-you-go basis Simply put, we can say that SaaS is a cloud-based software delivery service. Some prominent SaaS services that we are familiar with are MS office 365, Dropbox, and Google Docs.
According to research firm Gartner, the global SaaS market reached $145 billion (KRW 180 trillion) in 2022 and is predicted to continue growing at a rate of 40% over the next two years. Following this trend in growth, the global market is predicted to reach a whopping KRW 520 trillion by 2025. The domestic market is not excluded from this. According to the Korea Consumer Affairs Ministry, the domestic market will grow from KRW 578 billion in 2020 to KRW 1.14 trillion in 2025, a compound annual growth rate of 14.9% in Korea alone.
The analysis discovered the reason behind the growth in the SaaS market to have been the boom in demand for cloud-based services from when the digital transformation was in full swing during the pandemic. Additionally, this demand is expected to grow steadily in the future as customers who have used cloud services won’t readily give up the convenience it provides.
The target demographic for SaaS can be categorized into either users of B2C SaaS cloud services geared towards individual consumers, or users of B2B SaaS cloud services geared towards businesses. In general, SaaS solutions often provide both B2C and B2B. Many companies either begin as B2C and expand into the B2B sector or, conversely, start as B2B and expand into the B2C market. Regardless of their target audience, SaaS customers can enjoy significant cost savings and faster deployment, scaling, and upgrading of business solutions compared to maintaining on-premises systems and software. Furthermore, they can make more precise cost predictions.
Examples of domestic B2C SaaS companies include Yanolja and Jarvis & Billions (Samjum Sam, Jarvis). Yanolja started as an O2O type B2C accommodation platform and has recently been providing B2B SaaS services to help manage assets such as hotels. Jarvis & Billuns operates the B2C SaaS service, “Samtsumsam,” and “Jarvis,” a comprehensive income tax filing service and an AI tax management service respectively.
The B2B SaaS market is one of the fastest growing markets in the software industry, both globally and domestically. In today’s largest global market, North America, the SaaS market for B2B is booming, with 8 out of 10 unicorns being B2B SaaS companies. Salesforce, Adobe, Shopify, and other big global B2B SaaS companies are doing well, and SaaS companies continue to gain traction and attract investment despite the climate in the U.S. In Korea, Lemonbase, which operates a SaaS service for corporate performance management, recently secured a Series A investment of KRW 7 billion, bringing its cumulative investment total to KRW 14 billion, and it is expected that companies like it will continue to attract attention.
The reason the B2B SaaS market is growing so rapidly is that businesses are increasingly choosing cloud-based solutions over traditional software solutions. Companies choose SaaS because it improves worker productivity, paving the way for efficient business operations. With the recession making it harder to recruit good talent due to higher labor costs, it has become equally important for companies to increase the productivity of their existing employees, which is where SaaS solutions can help them run their companies efficiently.
Moreover, due to the recent digital transformation (DX) of businesses, software has become an indispensable cornerstone for all aspects of the industry. The growth of B2B SaaS can be attributed, in part, to the rising demand for enterprise software fueled by DX. The market has evolved as more customers favor subscription services that provide instant access and the flexibility to adjust usage over traditional software license purchases.
So, what are some of the benefits of B2B SaaS? Let’s take a look at the advantages of B2B SaaS services experienced from the user’s (business) perspective
SaaS solutions aimed at businesses are generally cheaper than traditional software solutions. They are usually offered on a subscription basis, which gives businesses the advantage of being able to terminate the service when needed.
SaaS allows for companies to easily add users and scale as their business grows and their needs change.
Good flexibility and accessibility
Because SaaS is cloud-based, you can access the software anytime, anywhere, from any device with an internet connection.
Increased work efficiency through automation
With SaaS solutions, businesses can improve the efficiency of their employees by using the automated services of B2B SaaS to perform tasks that were previously handled manually. They can also minimize the waste of resources.
According to Synergy Research Group, the global B2B SaaS market has grown at a compound annual growth rate of 39% over the past 10 years, and SaaS has replaced 23% of the software market as of 2019. By 2025, the SaaS market is expected to grow to KRW 525 trillion, making it both a promising and essential industry. Various startups with excellent capabilities have also begun entering the B2B SaaS industry and venturing into new territory. We are looking forward to the revitalization of the business ecosystem through growth in the SaaS market.
As shown by the growth of the B2B SaaS market above, the world is rapidly becoming more digitized for both individuals and businesses. In the future, DX will become an essential condition for companies not to be left behind. Companies that succeed in DX will be able to improve work efficiency, respond quicker to customer needs, and thus improve the customer experience. This means that DX will be an important trump card that will give them an edge over the competition. This quickly becomes a critical advantage for DX to outperform numerous competitors. Hence, it’s essential for businesses to undergo DX training tailored to their specific situations in order to achieve rapid digital transformation.
What is the right DX training for my company? Elice is a platform specializing in employee DX training, providing customized training systems and solutions optimized for each company. Balancing theory and practical aspects in DX education can be challenging, and many people often wonder where and how to start. For these reasons, learner dropout rates tend to be higher and quicker than in other educational programs. However, if you embark on your DX journey with Elice, you can address these issues.
Elice’s platform allows you to watch lectures and practice coding in real time, and automatically grades your code so you can easily see how you’re doing. It also supports learning on the web, mobile, tablet, and other devices with no installation required, making it easy to continue learning.
In particular, Project Based Learning (PBL) training that utilizes actual internal project data helps to closely relate what we learn to the real world. Provided with this engaging training, the relatively distant span from starting out to on-the-job application can be shortened for employees.
the need for DX training to stay in the competition. The Elice platform is a training platform for corporate DX that provides coding practice, video lecture solutions, and progress management all in one platform and is effective in increasing the digital capabilities of your organization’s members. Experience a uniquely engaging digital transformation through Elice’s corporate customized training courses that use actual internal company data, not just boring recorded lectures!
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