Saturation of the SaaS Industry

Claire Brenner
Claire Brenner  |  May 21, 2018
The SaaS industry has become a cluttered, polluted space.

What does that mean for buyers and how can they sift through the noise?


Key Takeaways - SaaS Saturation


  • The SaaS industry is polluted with 34,727 software products listed on G2 Crowd across 745 vertical industries – as more new products and companies begin to emerge, this saturation will increase
  • Sometimes, the least suspecting software markets are the most cluttered (No. 1 being medical software tools at 536 products listed on G2 Crowd, and school resource management at 375 products)
  • 10,002 SaaS products on G2 Crowd have at least one review.
  • User reviews can help potential software buyers sort through the clutter and narrow down their choices to a manageable number

Just two short decades ago, the software-as-a-service (SaaS) industry was a vastly different space. In the late 1990s through the early 2000s, companies asked the question "what is SaaS" and soon began to abandon on-premise software models (essentially software installed directly onto computers) in favor of SaaS offerings (software accessed through the internet). This transition brought professionals a smattering of tools in various markets with the intentions of simplifying their day-to-day work.

To say there are only a smattering of SaaS tools today would be a gross understatement. In less than 20 years, we’ve seen tens of thousands of new SaaS tools come onto the market as existing software companies have switched from the traditional model and new companies have emerged.

Some refer to this as SaaS pollution or SaaS saturation. What it’s saying, more or less, is that the SaaS market is cluttered. Don’t be fooled by having only heard of the industry’s giants like Salesforce and Oracle. Small and medium-sized businesses are plentiful. They make up a majority of the market with more appearing on the market every month.

These graphics do a phenomenal job of showing just how saturated the market really is – and these show only marketing software tools – 6,829 of them. These images represent a small segment of the massive SaaS industry.

Researching tools in a polluted software landscape

Searching for a new software tool can be overwhelming. Even when you narrow it down by type, there are still hundreds, if not thousands, of options you can choose from. Different markets, or software types, see different levels of saturation. Popular categories like project management software can have an enormous number of choices. In fact, this category on G2 Crowd has more than 350 products in it.

So all in all, how many different software tools are there? Well, this next number may come as a surprise, even for the experts who can rattle off different software companies and platforms.

"The SaaS industry is polluted with 34,727 software products listed on G2 Crowd across 745 vertical industries" - Tweet this!

This is good news because it means that potential software buyers will likely be able to find a tool that fits their needs perfectly. On the other hand, 35,000 software products is an absurd number of choices, even when broken down into different types and markets.

In such a saturated market, how do consumers ever make a choice? More importantly, with 35,000 choices, how can consumers ever know they’re making the right one?

Luckily for potential software buyers, SaaS companies and their marketers are embracing and seeking out customer reviews. Out of those 35,000 software products on G2 Crowd, 10,000-plus feature at least one review for buyer’s consideration.

saas-saturation-statistics

There are literally thousands of different solutions for various problems. The 35,000 SaaS solutions on G2 Crowd cover 745 different categories, ranging from the well-known spaces like CRM and team collaboration software to the lesser-known farm management software and veterinary software categories.

Some of the least suspecting SaaS markets are in fact the most saturated – by that, we mean these categories have the most individual products on G2 Crowd.

The medical software and school resource management categories have 533 tools and 376 tools, respectively. These categories may seem like they serve niche audiences, but they are heavily populated. Both the healthcare and education industries are massive, with hundreds of billions of dollars in taxes going toward them every year. The more you think about it, the less surprising it is that so many software companies opt to provide offerings for these professionals.

That said, categories like CRM, team collaboration, and other typical office tools also feature hundreds of software products. CRM software is much more than just Salesforce. This category on G2 Crowd is home to nearly 250 different software tools. Similarly, the team collaboration software category hosts 274 products and features Slack, the most-reviewed tool on G2 Crowd.

Nearly every company is already using team collaboration software. If they’re not, you can bet they’re on the hunt for a tool. Can you imagine sorting through nearly 300 products? Much less, successfully selecting the one that will fit your company’s needs?

And with 300 choices, how do you know what’s worth paying for?

mobile-saas-saturation 

The emergence and growing popularity of customer reviews make the vast world of SaaS marketing just a little bit smaller – at least, more manageable.

When you’re able to see what users from companies similar to your own are saying, you can quickly narrow down the 300 products to a more reasonable number of choices. When you continue to add filters like company size, user role, and user industry, you have even fewer choices, and those are likely more tailored to your specific needs.

Before you begin to search for a new software platform, consider the features that are your absolute must-haves. Determining your definite needs are crucial to finding software that will solve your business problems.

When nailing down your must-haves, be certain to incorporate views from multiple people at various levels in your company. While your leader’s opinions are important when selecting a tool, it’s also critical (maybe even more essential) to seek out input from the employees who will use the SaaS solution in their day-to-day.

Then, seek out specific products whose reviews highlight your desired functions.

For example, if you needed a solution to your problem like...yesterday, then consider searching for reviews that mention a tool’s speedy implementation. If reviewers similar to yourself discuss how quickly they were able to get the product up and running, it’s likely you’ll have a similar experience. The faster the implementation, the closer you are to seeing the results you’re looking for.

Additionally, use your network. If you have friends or even LinkedIn connections in a similar industry and role as you, reach out and ask what software they use in a similar situation. It’s probable they’ll be happy to rave about their tool or share their frustrations.

If you don’t want to contact people directly, G2 Crowd’s filter tool can serve a similar purpose. Filter the reviews by your company size, role, and industry to see what professionals similar to yourself are saying.

If you work for a small business, using a tool that other small businesses have had success with is your best bet. An enterprise company (we classify as having 1,001-plus employees), or even a mid-market company (50-to-1,000 employees), may have different needs, goals, or resources than you do, resulting in a software selection that likely isn’t the best possible fit.

 g2crowd-saas-filter

User reviews are an important step in determining your ultimate software fit. While seeking out insights shouldn’t be the only research you do, reviews are still a critical part of your purchasing process. Just a few visits to a software review platform can narrow down your choices from hundreds to a select few.

SaaS saturation is very real. As we discover new business problems and innovative ways to solve them, the market will continue to populate as tools emerge. Luckily, we’re also in a time where the buyer is empowered. Hearing a killer sales pitch or completing a free trial doesn’t devote you to any particular software company. With user reviews, buyers can sort through the clutter and find the tools that works for them and their needs, and will ultimately help them achieve their goals.

 saas-saturation-infographic

* Editor’s note: All data from G2 Crowd as of May 02, 2018

 

 

Claire Brenner
Author

Claire Brenner

Claire is the content marketing team lead, coming to G2 Crowd after graduating from the University of Dayton. Born and raised in the Chicago area, her brief stint in Ohio gave her a new appreciation for deep-dish pizza, but left her well-versed in Cincinnati-style chili and "cities" with a population fewer than 400,000. While not writing, Claire can be found practicing calligraphy, seeking out the best dive bars in Chicago, and planning her next trip.