SaaS Trends In 2022 and a Look Back on 2021

Make no mistake about it. The Software as a Service, aka SaaS, business model, is here to stay. 

So popular are SaaS solutions that companies claim 70% of apps they use are SaaS-driven. By 2025, that number would have risen to 85%. From billion-dollar mega brands to fledgling startups on a shoestring budget, SaaS suits every business.

In this article, we’ll look at how B2B SaaS fared in 2021 and also predict the future trends to watch in the sector as we head into 2022. 

2021 In Retrospect

Looking back, 2021 produced a mixed bag of results for SaaS companies. 

Some brands have seen their stocks grow significantly as they rode the wave of post-Covid growth. But others saw their stock nosedive. In particular, those in e-Commerce and business communication software rallied strongly.

Here are a few examples from leading SaaS providers to illustrate the point as captured by SaaStr.

• Zoom, which saw an insane 360% growth at the height of the pandemic in 2020, slowed down to 35%. While growth shrank, that’s still an impressive $4B+ ARR. 
• Shopify, another SasS giant, witnessed a similar trend. They posted a 46% YoY growth, a far cry from last year’s 110 percent growth. 
• Snowflake, a cloud computing brand, grew by 110% which represents a $1.3B ARR. Quite a surge.
• MongoDB improved their figures from 44% to 50% which is nearly $1B in ARR. Certainly figures not to sniff at. 
• Okta, a renowned identity, and access management brand, grew to 61% at $1.44B in ARR, a 22% growth from the previous quarter’s figures.

Studies elsewhere confirm these mixed signals.

These varied numbers are understandable. 

Covid gains won’t disappear overnight. It’ll take a couple of years for growth to taper off. Some brands will ride on the momentum longer than others, which is why their growth will linger on.

We’ve looked back. It’s now time to look forward to what’s coming.

7 SaaS Trends To Watch In 2022

Here are the 7 hot SaaS trends to be on the lookout for as we head into 2022.

1. Artificial Intelligence (AI) will continue making inroads.

AI has disrupted virtually all industries and niches. SaaS is no exception.

The AI software global market is growing rapidly and will reach a staggering USD126 Billion by  2025. Every sector has to find ways to leverage AI technology to boost business or get left behind by competitors.

In SaaS, AI can enhance business in so many ways:

1. Improve customer service.

More and more SaaS brands are using smart chatbots to provide prompt responses to customer queries and answer regular questions on autopilot.

2. Rapid data processing.

With AI, software brands can now process countless data points at the click of a finger. This makes for better tools that allow users to complete actions faster.

3. Hyper personalization for users.

AI and machine learning capabilities can pick patterns in user behavior based on previous interactions. The technology then preempts future user needs and tailors future interactions to their exact needs. 

4. Predictive analytics.
   Churn is an enormous challenge for B2B SaaS companies. Machine learning can anticipate user behavior and set off alerts when users are about to drop off. 
   
5. Strengthen security.

Today’s users are fussy about security. Mess up with their data and they drop you in droves. AI picks threat detection on apps, networks, and platforms faster, thus providing iron-clad security for users.

With these and other benefits, it’s no surprise that AI’s influence in SaaS will continue to grow in the coming years.

2. Vertical SaaS will take center stage.

Another popular trend that’s set to dominate is vertical SaaS.

Traditional SaaS solutions cater to many industries. They solve similar problems across industries. That’s changing—fast.

Vertical SaaS has arrived on the scene.

Unlike conventional horizontal solutions, vertical SaaS tools serve a specific industry. They go all in, in ONE niche industry, for example:

• FinTech SaaS e.g. Braintree and Gravity Payments.
• Insurance SaaS e.g. Clearcover and BrokerLink.
• Auto Manufacturing SaaS e.g. Ovo Automotive and Spin Car.
• Collaboration SaaS e.g. Zoho Projects and Gliffy.
• Healthcare SaaS e.g. Exitcare and Greenway Medical.

Get the drift?

Here’s a graphic of vertical-specific SaaS companies.

Source: Finix

With users becoming pickier by the day, specialization is the future. So we will see more companies focusing all their energy on one industry instead of spreading them themselves too thin. Then they’ll be able to attract and keep more users. 

3. Micro SaaS will become the in thing.

The SaaS landscape is a highly competitive cutthroat. 

A few well-known big players dwarf everyone else in each industry. In such an uneven playing field that favors established brands, it’s tough for new companies to break into the market, let alone challenge the big boys.

That’s where micro SaaS comes in.

Micro SaaS is a niche market business with a narrow focus. In a sense, it’s a niche in a niche. Micro SaaS brands:

• Have a small focus.
• Target a specific aspect of a niche market.
• Run by one person or a small team. 
• Operate with minimal costs.
• Have a small but committed user base.
• Deal with customers directly.
  

For instance, Ahrefs, SEMRush, and Moz dominate the SEO tools sectors. It would take a herculean effort for a new company to compete with these three giants. But smart brands have carved small, profitable sub-niches inside the wide SEO space.

SpyFu has built a loyal clientele by focusing on competitive intelligence. Frase is a popular solution for creating SEO content briefs. SE Ranking centers on monitoring keyword rankings. Plugins and add-on are perfect examples of micro SaaS.

Super Lemon, a WhatsApp live chat button for Shopify stores founded by a solopreneur, grew to 2000+ users in only 40 days.

Source: Preetam Nath

Pretty impressive, right? 

That’s the power of micro SaaS. This rapid adoption has seen this simple WhatsApp button to $25k in MRR. 

As SaaS companies seek to meet their users’ custom needs, micro SaaS will be the answer they will turn to in the foreseeable future.

4. Integration with other tools will come to the fore. 

Take a guess.

How many SaaS apps does the average company use? 

Twenty maybe? Wrong. The average company uses 252 SaaS apps. Surprising, hey? The reason is simple. The 21st Century workflow has many moving pieces. From team collaboration to signing e-documents, from social media management to SEO optimization, from project management to competitor analysis, the list is endless.

No app can do it all. Yes, even so-called all-in-one tools.

The solution?

Flexible solutions that integrate smoothly with other common tools. That’s why integration capability has become increasingly popular for all SaaS brands that want to keep their users by connecting seamlessly with their favorite tools. 

Zapier offers users 3000+ integrations.

Of course, this doesn’t mean every SaaS solution has to have so many integrations. But it shows how much users want to improve efficiency and automate their workflow. Moving forward, only SaaS companies that accommodate their users’ favorite tools will thrive. 

5. Unbundling will unlock more revenue opportunities.

Traditionally, SaaS has been all about releasing feature after feature to keep up with user needs.

Not anymore.

There’s a shift. Clever brands are maximizing revenue by doing the opposite. Instead of cramming as many features into a single service, they unbundle services. They decouple them into separate products.

The result?

Multiple products users buy separately. This drives more revenue for the company. The beauty of unbundling is that once you impress users with one product, they are more likely to buy the other products on offer. 

Many companies have made a killing by unbundling Excel Spreadsheet.

Source: Foundation

Countless companies have made billions by splintering spreadsheets into invoices, CRMs, Gantt Chart solutions, and more. Indeed, less is more in this case. 

6. White Label SaaS will grow stronger

White labeling has been around for a while.

And it isn’t showing any signs of stopping anytime soon. White label software allows businesses to buy software and also get reseller rights for it. Importantly, when companies use and resell the software, they can add their branding.

There are many benefits of white labeling:

1. White labeling protects your brand identity. Because white label services allow companies to slap their branding on the product, thus protecting their brand identity. This also strengthens users’ loyalty to your brand as they associate your name with quality products.
2. White labeling gives you a quick entry into the market. Breaking into the market is an arduous process. But with a white label product, you sidestep all the hassles of creating a product. No coding. No beta testing. No troubleshooting. You just go straight to market with a polished product.
3. White labeling saves you tons of cash. Developing a quality product is costly. Many startups don’t take off because of a lack of funding. A white label product you don’t have to spend a dime on product development. Simply plug and play.
4. White labeling keeps marketing costs down. Marketing costs gobble up a large chunk of a company’s budget. Brands that make white label goods can significantly reduce their marketing spend because the products have a ready market. 

In short, starting a business with a white label product is a breeze. All you have to do is to come up with a catchy name for your business (a company name generator can help with this) and then hunt for ideal products to sell on SaaS reseller platforms like the one below.

Source: Sell SaaS

All things considered, white labeling helps emerging SaaS brands save costs, quickly break into a tough niche, and scale effortlessly. If you own the reseller program, you get an army of people who want to sell your product. This allows you to focus on improving product quality and increasing production for higher profits. Indications are that the white label craze will gather more steam in 2022 and beyond. 

7. Mobile solutions will rise significantly.

There’s no doubt that we live in a mobile-first world.

With 4.32 Billion internet users across the world representing a 56.89% share of all global online traffic, cloud solutions can’t afford to ignore mobile devices. Mobile solutions will change the face of SaaS.

No wonder cloud solutions are scrambling to provide mobile optimization for their services to accommodate business owners who run their businesses on the move. 

Mobile optimization includes:

• Providing mobile apps (both Android and iOS) for all solutions.
• Creating more mobile features to match the desktop experience.
• Strengthening personalization for mobile users.
• Creating a website that has a mobile-friendly user experience.

Because of the fast-paced mobile-first modern workflow, SaaS companies will prioritize mobile optimization in the coming years.

B2B SaaS: A Resilient Business Model

As we wrap up 2022, we can describe SaaS in one word:

Resilient.

No matter the challenges that arise on the way, B2B SaaS has always been flexible and strong enough to rebound and keep on thriving. Gartner expects the global cloud solutions market to grow to an astonishing $331.2 Billion in 2022.

Tap into the wave and hop onto the lucrative SaaS train.