Will the SaaS evolution stifle digital innovation?

The Marriage of Service and Technology

At Connected Path, we’re excited to be hosting The Unconference later this month. We’ve had some interesting discussions with those who plan to put themselves forward to speak, and we can’t wait to see what content the audience will pick on the night.

When we sat down to plan The Unconference it was important that the content tied back to a theme. The theme we selected is “The Marriage of Service and Technology”. Thinking about how these two counterparts will evolve is a topic that is rife in the digital industry at the moment and presents lots of differing opinions and avenues to be discussed.

One such opinion that exists is that Software as a Service (SaaS) now drives industry innovation in digital.

This idea perhaps exists because companies like Salesforce, MailChimp, Kenshoo, Marin and Impact have brought new pricing models and ways of doing business to generally static industries. But some people question, will SaaS really be good for digital innovation over the next decade?


SaaS Business Models Experience Growing Popularity

What’s undeniable is the growth and popularity of SaaS business models. According to the Q1 2018 benchmarking report on Digital Commerce Trends by 2Checkout, 76% of sales in Q1 2018 were for recurring-based purchases. The average order value for SaaS services in 2018 was $50, a slight increase on the $48 from the previous year, however that figure has grown three-fold in the last five years.

The SaaS model has taken a long time to evolve. It began with the concept that tech vendors of all shapes and sizes could ‘cut the fat’ and deliver streamlined, no frills products, by divorcing technology from ancillary ‘services’ that otherwise made those products more expensive.

Salesforce was one of the first darlings of the SaaS economy. It took the expensive, all encompassing CRM solutions delivered by the likes of SAP and built a simple, streamlined alternative that could be used off-the-shelf without an army of consultants. One of the main reasons that SaaS technologies took off was because they reduced the financial risks associated with deployment, allowing IT procurement to be accounted for as an operating cost rather than as a long-term investment.


SaaS Finds It's Way Into Digital Marketing 

Although CRM was one of the first industries to mass-adopt the SaaS model, digital marketing has been fertile ground for SaaS solutions in recent years, particularly to manage emerging media channels like social and influencer.

SaaS for digital marketing took the layered service provided adopted by some agencies and hybrid ‘as-a-service’ vendors, and offered clients the opportunity to move it inside their organisations…creating the new eco-system of self-serve digital marketing that can be seen in everything from bid management in search to demand-side display and social media.

The growth of SaaS for digital marketing was undoubtedly made possible by the boom in digital media skills – coincidentally much of it driven by internships run through agencies and ‘as-a-service’ vendors – that allowed advertisers to hire the skill-sets necessary to manage their SaaS based digital marketing platforms.

In affiliate marketing, Robert Glazer, CEO of performance marketing agency, Acceleration Partners, has extolled the view that adoption of SaaS technology platforms has given advertisers greater flexibility and more control by separating technology from service. However, unlike the Salesforce example from a decade ago, the client benefits appear to be less about simplicity and more about the additional marketing sophistication that can be unlocked by technology-only SaaS vendors.


What's Next For SaaS?

The interesting question is where this evolution towards SaaS pricing models will take us? Could Salesforce’s SaaS model have existed in the CRM space without the work ‘as-a-service’ platforms like SAP did to build the market for enterprise CRM? Could Glazer’s vision for SaaS affiliate platforms exist without the foundations laid by ‘as-a-service’ companies and would SaaS bid management in Search have developed without the shortening of the skills gap driven by large media agencies? With these things in mind it’s hard not to think SaaS and the separation of service and technology is merely commoditisation of an established market.

Innovation is not an obvious by-product of SaaS platforms. SaaS models feel like a natural evolution thanks to the groundwork in innovation and knowledge development already put in by ‘as-a-service’ models.

Moreover, because the principle of SaaS platforms are simplicity, ease, client-control and self-service it can be argued that the rise of SaaS may stifle industry innovation, because that vital connection between the client and the technology – which is the service – will be lost. It removes a vital feedback loop between client and platform that adds distance, lowers common understanding and in the years to come is likely to inhibit innovation.

This may not be so important for really established industries like enterprise CRM, but is extremely important for newer sectors like influencer marketing, where the relationship between as-a-service vendors and their clients may be crucial to shape the market.

So while we admire the freshness, ease and flexibility SaaS has brought us, we should beware the knowledge drain and stifled innovation that may come from a total separation of technology and service. 


Here we’ve talked through one angle of “The Marriage of Service and Technology”. To hear more opinions and different topics around this theme register to attend The Unconference on Thursday 20th September.