In 2010, SaaS companies catered exclusively to large enterprises in Silicon Valley. Salesforce, ServiceNow, Workday emerged as industry leaders, a hierarchy that stuck until another now-leader came along: Square.
Square's key insight was simple: The same tools that fueled Fortune 500 companies would work just as well for small businesses and yard sales. By democratizing SaaS, Square disrupted the industry and brought new opportunity to entrepreneurs.
Until Square was practically a household name, industry leaders left it alone. Now in other industries, that same dynamic is driving new SaaS solutions.
Square's Story Comes Full Circle
Trends are easier to spot in retrospect than in the moment. But as we close out the decade, there's a pattern emerging: SaaS companies are evolving to serve new niches.
This development will have dramatic consequences at both ends of the business spectrum. Enterprise users will see less centralization and more specialization in their tools. Entrepreneurs will use those specialized SaaS offerings to disrupt industries in ways unimaginable today.
Those changes will create new verticals in the largest, most significant industries of the American economy. Inefficiencies in education and healthcare will invite exciting new solutions from SaaS providers.
SaaS Goes to School
A decade ago, Blackboard was the go-to software in education for online learning. As the only game in town, however, the platform wasn't very responsive or adaptable to user concerns.
As SaaS gains steam in education, expect solutions to focus on the user experience. Just acquired for $2 billion, LMS tool Instructure adapts to meet the school or employer's specific needs. By blending an open software model with numerous integrations, Instructure can be configured for a huge range of content.
Like Square, Instructure changed the industry. By taking user feedback into account, it built its platform around pain points that anyone who's used LMS systems knows by heart.
Running in parallel with the trend toward better UX is the demand for more affordable employee training. Following the lead of platforms like MasterClass, LinkedIn leveraged its name recognition with employers to develop LinkedIn Learning. LinkedIn Learning's certification programs are widely accepted by employers.
As education costs rise and the competition for talent worsens in the 2020s, expect SaaS-based credentialing programs to explode. And as employers encourage employees to embrace them, expect their UX to improve as well.
SaaS's Future in Healthcare
Compared to education, SaaS's changes to healthcare will come more slowly. As a highly regulated and fractured industry, healthcare takes longer to vet and adopt new tech.
Still, any SaaS company that can create efficiencies in the healthcare system stands to profit. Health records company Epic Systems does $2.7 billion per year in annual revenue, largely because it managed to make medical records accessible yet secure across health systems.
Startups that can handle scheduling, preventative care, prescription renewals, insurance even 25% faster could replicate the success of companies like Instructure or Epic.
That's why Google, Apple and other major players are entering the fray -- but don't expect even tech giants to change the game overnight. The current healthcare system represents one-fifth of our economy. In many cities, hospitals are the single largest employers. These institutions won't go the way of the mall.
Expect enterprise tech companies to partner with hospital systems as their healthcare providers of record. Pharmacy chains like Walgreens and CVS may also assume a larger role in providing healthcare services.
In healthcare, education, and more, the SaaS movement is far from over. Pay attention in 2020, and the next great disruption could be yours.