Industry executives and experts share their predictions for 2023.  Read them in this 15th annual VMblog.com series exclusive.

Appfire Executives Share Expectations for the SaaS Industry in 2023

By Randall Ward, co-founder and CEO, Appfire

This year has been riddled with curveballs - and thrills - thrown toward the technology sector. The impacts of the hybrid-remote workforce on how teams work together and collaborate and breakthrough developments in artificial intelligence (AI) and machine learning technology routinely made headlines. These events, paired with current (and anticipated) market conditions prompting slowdowns in investment and growth opportunities, and fluctuating patterns in merger and acquisition (M&A) activity across the tech industry, have all played large roles in solidifying my predictions for the new year.     

Most notably, Software-as-a-Service (SaaS) is coming to the forefront as a technology vertical of focus. Why? Because in times where uncertainty is high, and budgets are low, it is critical that organizations have access to tools that will help them collaborate effectively and efficiently; helping them achieve business goals and internal growth.  

Below I will walk you through my predictions for the technology industry - with a particular focus on SaaS - and also share insights from my colleagues at Appfire about what is ahead for the SaaS industry in 2023.   

Prediction 1: PaaS is the new SaaS

Ironically, the trend that I'm most excited about in 2023 is that more and more manufacturers are evolving the delivery model of their cloud products away from what's become the de facto standard Software-as-a-Service model into a Platform-as-a-Service (PaaS). The latter allows the vendor to create a scaled economy around their software by inviting 2nd and 3rd-party developers to extend their offering by using apps or by creating full-scale, customized products.

One way to think about PaaS versus SaaS is with SaaS, you are serving your application to users with little option to customize and fit their needs. In contrast, with PaaS, customers and developers can consume one or more services your platform offers, molding it to their specific needs. I like to think about this by comparing YouTube vs. terrestrial television, where PaaS is akin to YouTube. YouTube allows users to both consume and create. YouTube offers creators tools (services) that help them create, package, and promote their content. Now compare that to television, where you are simply a consumer, and your only choice is to change channels.

One strategic topic that should be part of every leadership team and board discussion is "How quickly can we transform our Software-as-a-Service offering into a Platform-as-a-Service?" In turn, "How do we create a thriving developer economy that attracts businesses who want to leverage our platform to develop products of their own?"

Prediction 2: Data residency across many geographies will become a key differentiator when selecting cloud providers

Providing customers with the choice of where their data is stored should become table stakes and not only be made available by the largest SaaS companies but by all companies. Equally important is ensuring the manufacturer supports a dozen or so geo locations, not just two or three. Purchasing a subscription from a provider who doesn't offer Data Residency is like walking into a grocery store to find out that they don't have a produce section.

Prediction 3: Multi-factor authentication will become the required security standard for SaaS applications

In 2023, I expect SaaS applications to default to multi-factor authentication versus allowing users to opt into the security model. Standard username and password authentication are not secure, it never was, and we are long overdue for wide-scale adoption.

And here's what some of my colleagues shared regarding their expectations for the industry in the coming year:

Andy Boyd, SVP of Product Management and Growth

In 2023, the SaaS industry will see the following:

Empowered teams. Organizations have moved away from a top-down, prescriptive approach in deciding "how the team should work." Organizations have empowered their teams to decide this for themselves - including both the way they work and the tools they use. This means SaaS vendors have the opportunity to increasingly penetrate large organizations by starting with their empowered teams and then spreading their value throughout the organization. This is in contrast to the more traditional top-down, c-level sale process.

Continued growth in ecosystems. Teams select the tools they want and then customize them to suit their needs. Case in point, all of the top collaboration platforms support third-party apps and/or API integrations, enabling customers and their teams to customize the tools. Leading SaaS vendors will continue to invest in ecosystems (apps and integrations) to enable tool customization, and therefore, allow teams to work the way they prefer.

Integrated workflows. Empowered teams are not consolidating on a single vendor, but rather selecting "best-of-breed tools." While this allows them to work the way they want to work, it also creates a disjointed flow of work, causing disparate information across teams and tools. In response, teams will increasingly need to connect work and information flows across these disparate tools for better facilitation.

Paul Lechner, VP of Product Management

The SaaS industry will witness the following trends in 2023:

Increased customer demand for API connectors. Gone are the days of one vendor fulfilling most or all of the needs of an organization. This creates flexibility for customers to choose from a myriad of software options, but it also creates data silos that break the flow of work. APIs and integration apps will pull data from disparate data sources to create a unified view of work. 

More organizations leveraging cross-platform tools. Along with more APIs and integration apps, there will be a growing need for cross-platform tools. As organizations connect multiple data sources and apps, they will need tools to make sense of all the noise and act as a hub that pieces everything together. Imagine a tool that tracks time across all of an organization's project apps, where stakeholders can access a single view of tracked time across Jira, Azure DevOps, GitHub, and more.

Security services are becoming an even greater necessity. As customers give control to the cloud, they will demand increased security services. In the past, they handled this aspect on-prem or more recently, in a private cloud. While many organizations will never fully give up control to the cloud, they will at least adopt a hybrid approach. SaaS vendors and especially platforms need to think about security, authorization, data residency, etc. This also provides customers advantages as platforms like Atlassian or Salesforce move to providing a full suite of services: DevOps, service management, project collaboration and everything else they need in the enterprise collaboration tool chain.

While it's difficult to determine exactly what the next year holds for this undeniably dynamic industry, one thing is clear: in 2023, organizations will need to dissect their operational landscapes to find what works best for themselves, their partners and their customers. By maintaining industry awareness and making developments in technology - as well as keeping interpersonal factors such as culture and preferred workflows - top of mind, the SaaS industry is positioned for another year of healthy competition and even more opportunities for growth.    

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ABOUT THE AUTHOR

Randall Ward, co-founder and CEO of Appfire

Randall Ward co-founded Appfire in 2005 and today serves as CEO. He is an accomplished technologist and product strategist with a background in human behavior, software development, go-to-market strategies and telecommunications. In his role, Randall is focused on strategy, vision, and sales. He has previously worked with the US government, Oracle, Vodafone, and many dot-com startups. Randall founded Appfire with one goal in mind - to help companies achieve great things while enabling teams to plan and deliver their best work. In today's hybrid-remote workforce, seamless collaboration is more critical than ever for both cloud and on-prem environments across organizations of any size. By helping team collaboration and productivity software company Atlassian to conceptualize and build its marketplace, Randall has led Appfire to more than a decade of profitability as a leading anchor and supplier of apps to the Atlassian ecosystem, with recent expansion into the Microsoft and Salesforce ecosystems.