Point of View

HFS launches SaaS XXV, measuring business value creation of leading SaaS solutions

November 18, 2021

The convergence of SaaS and services has re-focused the ROI of software towards achieving defined business outcomes.

With so many sophisticated tools and platforms on the market – many of which offer far greater functionality than most enterprise customers need, the onus is shifting rapidly towards the business value these solutions bring to customers. This is a major pivot away from customers simply purchasing what they are led to believe are the best features and functions and expecting miracles.

The winning SaaS solutions will be those that gain the trust of their clients to invest in learning the software and understanding its capability to enable their business outcomes to be achieved.

HFS launches a new initiative, “HFS SaaS XXV” to understand how SaaS is becoming a part of the organizational DNA.

We are looking at software differently.

HFS’ new SaaS XXV initiative aims to provide an understanding into which SaaS providers are delivering maximum value creation to enterprises and offering robust services ecosystems in which to deliver this value.

We are surveying over 600 technology and business executives across Global 2000 enterprises to rate and rank 25+ SaaS providers (see exhibit below) based on current implementations, future implementation plans, and relative satisfaction with value creation.

We are also reaching out to over 100 senior executives across leading consulting providers and System Integrators to understand their investments and the success metrics they are choosing in building a services ecosystem for their applications practices.

Exhibit 1: HFS SaaS XXV at a glance

 

Source: HFS Research, 2021

The convergence of “digital services” and “smarter software” results in a new form of knowledge worker

The digitally fluent citizen now possesses tools elevating and accelerating how they do their job and can generate value at a velocity not previously possible. Cloudification of IT, automation of business processes, and AI-powered testing and learning offer a faster and data-driven (read evidence-based) route to business outcomes. And HFS has long documented the rise of emerging technologies and how they are dramatically changing both the enterprise services and software landscape, for instance:

  • Embedding AI, automation, and analytics in busines and technology services are now commonplace. The result is a vast number of global services providers reporting their revenue growth as associated with “Digital” – a priority over traditional outsourcing activities.
  • Enterprise software is also getting smarter and more dynamic. With deep, in-bedded analytics, APIs, and the rise of low-code, modern software makes it easier to interpret data and for users and development teams to quickly build more effective workflows.

In a recent HFS LinkedIn survey, 40% of respondents agreed with statements that SaaS is either replacing or converging with traditional business process outsourcing.

Focus should be on value creation, not valuation.

Software-as-a-Service (SaaS) was initially coined as a delivery model. However, it quickly morphed to a revenue model based on subscription and consumption models, replacing end-user licensing agreements based on installing software on a device or providing a set number of user access rights. As such, SaaS fundamentally became a cost-based equation, as it was based on revenues for one party and costs for another party rather than a value creation model.

Nearly two decades after its introduction, software, delivered as a hosted and consumed asset, is transforming how outcomes are achieved. This is due to advancements in the software, not the revenue model. Today’s SaaS solutions complement and enhance user experiences by including artificial intelligence (AI), analytics, automation frameworks, external application interfaces (APIs), and increasingly low-code tools.

With smarter, more capable software, users can actively address business, customer, and supplier experiences. Value is created as tools within the software capture, manage, and deliver data in greater context to the job at hand. These tools reduce the costs of providing more information to more people and instead provide more of the right information to the person who needs it the most.

The Bottom Line: Software should be about value creation and SaaS XXV is our response

The HFS SaaS XXV initiative will track, engage, and evaluate the SaaS providers and articulate the outcomes they create through end-to-end processes. We are knee-deep in research right now but watch this space for the results….coming soon!

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