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What's Behind the Shift to the SaaS Business Model?

Saas businesses are on the rise and payment processing solutions are the driving force behind its growth

Software as a service (SaaS) is surging. Market analysts at Transparency Market Research see it as a rapidly-expanding market, growing toward becoming a $112.8 billion industry by 2019 and $164.29 billion by 2022. SaaS works well in several different market niches, and as it grows will expand into many more. The opportunities for developers are virtually limitless. As payment processing continues to evolve, software solutions as business models in and of themselves will follow an ever-steeper growth trajectory.

SaaS as a Business Model

Software as a service, in historical terms, still represents a young industry, with the first SaaS business coming less than twenty years ago with Salesforce.com. Today, though, cloud computing serves almost everyone in some way: with email service, smartphone apps, or web-based home products. Still, the concept is just scratching the surface in the business world.

Companies long wary of operating in the cloud are discovering not only that they lack the internal infrastructure to manage their growing data needs, but that cloud servers are often more secure than on-site storage. SaaS companies thus fill a need that actually enhances their clients' ability to operate safely and effectively.

For software developers, this can involve creating software for specific functional needs common to all businesses, or creating to cover a swath of services for a specific industry or even company. As long as programmers can identify and produce for the needs of their clients, SaaS as a business model should continue to grow.

Industries Shifting Toward Software Solutions

The key to unlocking SaaS opportunities remains innovation. Software developers create new applications every day, allowing companies to serve their clients' needs with more applications that impact more industries. Some of the most obvious areas in which cloud-based software can benefit companies are those that everyone requires and collect large amounts of data over time: invoice billing, utility and service payments, payroll processing, and other services that involve repeated processes and benefit from automation over time.

Increasingly, though, other kinds of specialized services lean on this model. The more robust the software applications, the more companies can benefit. Event management companies and travel agencies, for instance, find in software as a service companies powerful allies to improve and streamline project management and scheduling functions. As cloud processing becomes not only more prevalent but more necessary, business software solutions are both growing and specializing more.

How Payment Processing Drives the Shift

Behind all of the promise for cloud-based software businesses is the burgeoning payment processing industry. Cloud-based companies require ways to bring in revenue and distribute their money quickly and seamlessly. Software products that integrate merchant services to manage and complete payment processes add value to an already compelling business case and allow businesses to further streamline their operations.

Any business depends on a reliable revenue stream to maintain and develop its operations. For SaaS companies to create their most compelling business case for their clients, building payment solutions into their product is essential. Not only does it allow the clients to collect money efficiently, but the processing can automatically direct fees back to the software as a service provider, maximizing both the efficiency and the certainty of their own revenue streams.

Cloud-based software as a business proposition delivers critical services to clients. By building in merchant services and payment processing to the software itself, developers can take advantage of this growing industry and improve their own balance sheets in the process.

Contributor:

Shannon LeDuff

Shannon is currently the SVP Sales and Business Development for GlobalOnePay, a division of Pivotal Payments Inc. His goal is to establish strategic partnerships with sales organizations that specialize in the eCommerce space globally. As commerce shifts online, there is exceptional growth potential that Shannon can help ISVs, SaaS, Marketplaces and platforms tap into, to drive payments into profits.