2022 is set to be a big year for Software as a Service (SaaS). From AI taking a foothold to more sophisticated product-led growth models, deeply entrenched APIs to the globalization of SaaS, we’re in for a year of big changes and major growth.
SaaS statistics 2022
Before we get into the trends, it’s worth taking a look at the state of the industry as we entered the new year. The biggest theme here is exponential growth, thanks in large part to a pandemic that fast-tracked a work from home movement and increased the need for digital tools.
“Organizations are advancing their timelines on digital business initiatives and moving rapidly to the cloud in an effort to modernize environments, improve system reliability, support hybrid work models and address other new realities compelled by the pandemic.” Brandon Medford, senior principal analyst at Gartner.
This growth spurt doesn’t show any signs of dying down, either. In fact, it’s part of a larger boom in public cloud services spending. Gartner predicts that, by 2026, spending on public cloud services as a whole will exceed 45% of all enterprise IT spending, up from less than 17% in 2021. And when you consider that worldwide IT spending was expected to reach $3.8 trillion in 2021, a 4% increase on 2020, you can see that uptick represents a whole lot of spending.
So, SaaS is big business and growing fast and, with all the competition out there, it’s crucial for SaaS businesses to remain agile, continuously improve their product, and stay on top of the global trends.
SaaS trends 2022
We spoke to some industry leaders to find out what they think the top SaaS trends in 2022 will be and they did not disappoint. Let’s dive in.
Let’s start with a trend that’s more than just a trend: Artificial Intelligence.
“When we started messing around with AI in the very early days, we thought ‘it was all hype and we couldn’t see any practical implications of the technology that would help our customers.’ But as our R&D with AI advanced we started to see that it could actually do meaningful things. It can understand data and it can write — poorly right now, but it can write,” Mike Sharkey, Ortto CEO and Co-Founder shares.
“But we persisted with investing in AI, and we reached this aha moment where all of a sudden it was writing high-performance email subject lines better than its human counterparts.”
Before the marketers and copywriters among us freak out, remember — AI works best when it’s learned from an actual human. As Sharkey puts it, “it’s sort of like conducting an orchestra, you need to have a really good underlying model behind it and you need to teach it a lot.”
Once you teach it, the potential for personalization is unlike anything we’ve seen to date.
“We envisage a time in the not-too-distant future where AI will be able to craft messages at a one-to-one level. It’s almost like a human sending a personal email to a specific customer.”
Where once you may have created a welcome email for different audience cohorts, instead, the AI will take the framework you’ve given it and every piece of data it has to deliver a personalized welcome email that speaks directly to the individual — not just the cohort within which they fall. And if they reply to that email with a request, the AI will be able to answer that too, helping them along their journey in the product to ensure their success.
So what does this mean for SaaS businesses in the short term? Well, the earlier you jump on board, the better placed you’ll be to survive and thrive in the future.
“The companies that structure their data and unify it in a CDP format, where they’ve got structured activities or event-based behavior, then they’ve got firmographic, demographic, and transactional behavioral data in a single platform — well that really is the beginning of being able to create your own unique AI modeling,” Sharkey shared.
“We’ll reach a point where the businesses that have developed AI and are using it in their business will be able to out-complete their non-AI competitors, to the point where some of those non-AI competitors simply won’t exist anymore. That’s how fundamental it is.”
As disrupting as this shift will be, it really is more of an exciting utopia than a scary, job-stealing dystopia. There’s potential to supercharge your business, deliver a world-class experience to your customers, and give your team more fulfilling, future-proof work.
If all this feels overwhelming, focus on making 2022 the year you structure and unify your data in a CDP like Ortto. Simple as that.
The globalization of SaaS
SaaS was designed to democratize software and break down the barriers that prevented what Gartner calls “citizen developers” to create business solutions and applications with little to no development experience.
It naturally follows, then, that SaaS would be globalized in time. Theresa Mcendree, CMO at Recurly, sees this as a dominant trend for 2022.
“SaaS has dominated the US market, and now emerging economies are getting into the game. This expansion will lead to a local-first take and ultimately industry consolidation,” she shares.
Because SaaS businesses are built for global growth, it can feel as though the globalization of the industry has already happened. But take a look at the figures from 2021 below and you’ll see that the US is clearly the world leader in the space.
Here in Australia, SaaS businesses like Australia’s Atlassian and Canva have inspired entrepreneurs to take their SaaS idea seriously, and the fast-forward to remote work caused otherwise-wary decision-makers to give in to SaaS technology, giving these entrepreneurs a bigger pond to fish in.
Like Mcendree, we see this as a major win for the industry. The more of us that are out there, educating customers on the benefits of SaaS, and giving them the tools they need to succeed, the better off we all are. A rising tide lifts all boats!
Blend of Product-Led and Sales-Led Growth
“One of the SaaS trends that we’re seeing in 2022 is a move to a blend of product-led and sales-led growth strategies,” Alastair Simpson, Head of Strategy at Coassemble shares.
“In the last few years, we’ve seen SaaS businesses classed as fully product-led, like Monday, or sales-led, like Gong. But we’re starting to see businesses move to blended models; product-led businesses are adding sales teams to monetize their users, and sales-led organizations are looking to product-led strategies to get their product in front of more people.”
We're already starting to see this model take a foothold. “Companies like Miro and Figma showed the power of adding a strong Sales function to what was already a successful product-led motion to maximize revenue. Meanwhile, sales-led businesses started to utilize product-led motions like free trials to boost lead volumes.”
This model, when done correctly, can have major growth benefits. Simpson shares, “By opening your product up to the market you can supercharge your acquisition funnel and see volumes of leads that a sales-led motion just can’t produce. By leveraging rich product data, sales organizations can prioritize who their sales representatives reach out to and when.”
It’s not as simple as switching a sales team on or implementing a free trial, and the companies that come out on top will be those that take the time to think through their SaaS buyer personas and how, when, and why the change should take place.
“We’re also seeing more product-led companies build out sales teams and try to sell enterprise-style offerings to their user bases,” Simpson shares.
“The ones that get this right will leverage their product-led strengths, using their rich product data to inform sales teams of the ideal time to reach out to prospects. There are pitfalls to adding sales to a product-led model too early: you can start to lose your product-led focus as the demands of a sales team kick in. Companies like Slack and Figma are good examples of adding a sales team when their product foundations are firmly in place.”
For businesses that are currently sales-led, Simpson warns, “Sales-led SaaS offerings are often highly complex, and opening up a free trial without a proper understanding of how to activate a user may result in fewer leads, not more.”
As a more traditionally sales-led business, Coassemble has been working through some of these potential issues, with a goal to add more product-led motions in 2022.
“To ensure success, we’ll be doubling down on tools that let us access richer customer data and use that data to drive customer behaviors. We'll be spending more time in tools like Ortto!” Simpson shares.
Prioritization of product experience
Speaking of PLG…
“Product-led growth (PLG) has taken the SaaS world by storm over the last few years,” Eric Keating, VP Marketing at Appcues shared. “We’re all so busy standing up free trials that we forget why we’re even doing it: the way people want to buy and use software has changed—dramatically.”
The research supports this. Even in the B2B space, buyers typically only spend 17% of their time meeting with potential suppliers when considering a purchase, and 27% of their time is spent researching independently online. The more comfortable decision-makers get with this process, the more imperative it is for SaaS businesses to create an experience that makes the research process seamless — and, as Keating points out, the free trial too.
“Today’s users expect self-service, frictionless, personalized, and instantly gratifying experiences—and you only have a few minutes to prove to a new user that your product can deliver that. Offering a self-service free trial is a great start (89% of buyers wont even shortlist vendors without one), but it’s the quality of your product experience that will make or break your SaaS business. If it falls short, you’re out of luck. Your prospects have more options than ever.”
So, as product-led growth becomes a dominant strategy for SaaS businesses in 2022, Keating expects that "product experience will become a strategic priority for SaaS business leaders and go-to-market teams in 2022. We’ll see increased investments in product design, user research, new user onboarding, technical performance, and self-serve user enablement. At Appcues, optimizing our product experience is a 2022 company-wide strategy, with planned contributions from every department. As you dive in, remember: PLG is a team sport. We all have a role to play in improving product experience.”
Product design will become more important than ever
Product design is absolutely crucial to giving users a great experience. With the prioritization of product experience, Kentaro Kawamori, CEO and Co-Founder of climate management and accounting platform Persefoni believes that there will be a shift in the way SaaS leaders think about design — and a rush on great design talent. “We’re seeing the shift from companies looking at design as all-encompassing Product Design, not just UI/UX Design. There’s a shortage of high-quality talent in this field that cannot just push pixels around but look at the SaaS design lifecycle as how a product works, not just how it looks.”
This shift will, “reset how founders and VCs have been thinking about the ratio of engineers to product designers. Whereas in the past people looked at this as a hard and fast rule to follow, there will be product areas and instances where the ratio of designer to engineer will be much lower than historically.”
“The benefits are significantly increased user experience and journeys which can reduce onboarding, training, and support cost for customer service teams, but the downside is increasing R&D costs that will warrant quicker return periods on those headcount investments.”
The upside, for Kawamori who has invested in design right from the start, outweighs the down. “As new SaaS categories quickly become competitive after inception, design as a competitive advantage to the user experience and brand will be key.”
The rise of no-code AI tools
We’ve said it before and, we’ll say it again — AI is reaching its tipping point and this will be the year to get on board.
“2022 will be the rise of no-code AI tools,” Ashish Gupta, CEO at Polymer Search shares. “We're in the midst of an AI revolution and all the big players are using AI/machine learning to finetune their audience. For instance, YouTube's machine learning algorithm is so accurate that they can recommend interesting videos that only have a few hundred views.”
“AI is capable of creating prediction models, personalized shopping, generating artworks or, in the case of Polymer, allowing users to use AI to generate insights from their data. Almost every business can benefit from using AI and everybody is excited, but few people know how to use it. And hiring data scientists or specialized developers isn't a viable option for small to medium-sized businesses.”
Enter: No code tools — and the democratization of AI.
“No-code tools allow everyday people to have access to all the capabilities of AI. They can even provide their own training data, tweak some settings and allow the tool to do all the work. This means every business can have their own prediction model if they just know how to collect data or do basic scraping.
We've seen several no-code AI tools enter the market recently, and several existing SaaS companies adding an AI component to their product.”
Deeply entrenched APIs & integrations
In the graph below you’ll see data, Pandium released in 2021 that showed the number of integrations the top 15 SaaS companies have. The biggest learning? The bigger the player, the more integrations.
This year, deeply entrenched APIs and integrations will be paramount to success and a key component of SaaS marketing strategies.
Mcendree at Recurly shares, “With the proliferation of SaaS platforms, business leaders want an integrated view of data and rely on bidirectional API syncs to combine cloud back-end and on-premise systems.”
Going one step further, this integrated view of data - in the right platform- can automate workflows to, “increase productivity, and reduce manual error and time-consuming manual tasks.”
As a customer data platform with automation at our heart, these deeply entrenched APIs and integrations are core to Ortto's success.
Mike Sharkey, CEO & Co-Founder at Ortto shares, “In 2022, we have plans to continuously roll out no-code integrations to ensure we deliver on our data unification promise.”
As Simpson, Head of Strategy at Coassemble shared above, the unified view of customer data and activity tracking that integrations allow for is absolutely crucial to any SaaS business adopting a PLG strategy.
Sharkey agrees, “Product-led growth, once a bit of a fringe concept, is now widely adopted in the SaaS space. We know that having a single customer view and the ability to track custom activities or actions is absolutely essential to any organization with a PLG or PLG/Sales-Led hybrid model.”
If you’re an Ortto customer, you can connect all your customer data using integrations, identify custom activities that are important to your PLG strategy, and then use cohort analysis in our reporting tool to see which actions are more likely to impact MRR growth over time. Sharkey shares, “so our team is motivated to prioritize integrations — both in terms of the volume of platforms we can integrate with, and how those integrations perform in the platform. Get ready for a lot of exciting announcements in 2022.”
Digital collaboration’s widespread adoption
We’re in year three of the worldwide pandemic that sent workers home, and while offices may be opening up, it’s clear that employees want the flexibility to work wherever it is they’ll be able to do their best work.
So, with no sign of remote work going away, it follows that digital collaboration is absolutely crucial to a business’s success.
“The pandemic has accelerated the adoption of digital technologies that facilitate real-time collaboration,” Cody Miles, Founder & CEO at Ashore shares. “We’re already seeing the market experiment with products that improve collaboration on digital files (such as ours in Ashore), and soon, we’ll likely see an emphasis on real-time technologies. This trend has already begun with emerging features in ubiquitous tools such as Miro, Figma, and Sketch.”
It should be an interesting year for these tools. “In the near term, I expect you’ll see digital collaboration companies race to the bottom. The demand is huge, and there is an opportunity to capture the market right away. The long-term health of SaaS companies in this space, however, will require true product differentiators, as there are already many copycat products out there.”
Ashore has addressed this with a platform that facilitates creative feedback with automated processes and contextual comments across a huge range of file types including audio, video, and PDFs. “The reality is that digital collaboration offers more to creatives than traditional forms of feedback. Ashore improves digital collaboration through automated processes and contextual comments, resulting in a faster round of revisions with higher quality feedback.”
B2B(to C) expansion
In addition to digital collaboration, the work from anywhere movement has caused a shift in the way B2B is thinking about who their customer really is.
“Work from anywhere is (seemingly) here to stay, and as companies and workers continue to define what “works” many B2B stalwarts are driving significant growth going directly to the employee,” Mcendree shares.
“This is a new sales, product and marketing motion that brings new meaning to land and expand.”
While businesses are still figuring out exactly how to make remote work while doing everything they can to retain great talent, leaning into the platforms that employees are advocating for is a smart business move.
For B2B companies, expanding in this way can bring a step-change to marketing that may include an increased focus on brand, increased spending on social platforms or a new take on referral programs.
The final word
No matter what trends emerge in 2022, one thing is certain: SaaS is growing, and fast. Product-led growth is helping SaaS businesses scale fast, automated tools are creating more efficient, knowledgable teams and technologies like AI are unlocking possibilities we never could have dreamed of.
In short, it’s a great time to be a SaaS professional. Let’s keep learning, testing, networking, sharing, and creating remarkable stuff.