There could not be a better start to the year for the software-as-a-service (SaaS) industry in India. In the first week of 2020, the Drone Federation of India, a non-profit, has gone ahead and signed a collaboration agreement with Amazon Web Services (AWS).
With this deal, the cloud infrastructure provider will open up all open data sets and will be available to Indian drone startups to build applications with SaaS-based business models for agriculture, smart cities, emergency services, and land mapping.
January will also see the second edition of SaaSBooMi, an annual event for SaaS startups held in Chennai, arguably the SaaS capital of India. YourStory reported the highs of 2019 in the SaaS space, with total investments in SaaS businesses over the last three years totaling $555 million. This good form is only expected to continue.
Some may point out that more than half the funds raised in the industry was by Freshworks, one of the most successful SaaS companies to emerge out of India. However, there were more than 468 SaaS startups that were funded between 2017 and 2019. These developments only show that SaaS is going to be a multi-billion-dollar industry from India and, according to Gartner, globally, it will be a $110 billion market by 2020.
So, from enterprise-level software, what has led to this increased adoption of SaaS products in India and beyond?
“Businesses in India are ready to buy SaaS applications and experiment with them because of flexible payments and scalability,’’ says Vinodh Rajaraman, Founder of EagleOwl, a SaaS-based tool for the F&B vertical.
Vtiger, a Bengaluru-based startup, is elevating customer relationship management (CRM) experience. Its play? To help customer-facing teams avoid siloed tools.
“Imagine asking your salesperson to use 10 different tools for appointment pages, group mailboxes, quote approvals, contact management, and pipeline management. Instead of spending time on having conversations with customers, your sales professionals will be toiling getting data from different places,” points out Sreenivas Kanumuru, Co-founder of Vtiger.
Many SaaS startups are using artificial intelligence (AI) to help organisations scale up their data science practice. Most times, it is machine learning (ML) used inter-changeably as AI. But, Freshworks, which is a supporter of AI, plays the devil’s advocate when it comes to prowess of this technology.
To get smart about doing intelligence right, Freshworks surveyed more than 500 CRM users. The AI Hype Report exposed the lack of knowledge, trust, and value with current AI-and ML-based CRM solutions.
Only 22 percent of the respondents believe that AI helped them at work, while 73 percent say AI is yet to transform business operations. The report concludes that customers feel AI is not making meaningful impact on the bottom line.
However, companies like Freshworks continue to invest in AI to help customer relationship managers solve customer queries faster. Why?
“The richer the data, the better the experience and going forward machine learning will be making it easier for several of our customer- facing clients to understand queries faster,’’ says S T S Prasad, SVP of Engineering at Freshworks.
According to Forrester Research, many organisations have invested a lot of time and resources in their SaaS CRM systems, but they are struggling to make the most of their investment. CRM buyers are frustrated by high costs and long time-to-value while CRM users (or customer-facing employees using CRM to engage with customers) struggle with bloated, overly complex solutions that do not help them deliver more efficient and effective customer experiences.
SaaS CRM has been on the market for over two decades. What started as a lightweight system that was focused on the business user has grown in complexity over time. Today’s common solutions are chock-full of features that bloat the product and confuse the user experience with too much unnecessary data.
But a new wave of SaaS CRM is on the horizon, promising innovations around productivity and efficiency.
Over half of CRM buyers Forrester surveyed are planning to replace their SaaS CRM solution by 2020. And 28 percent were already on the hunt for a new solution or piloting one in 2018.
Indian SaaS startups like Bevywise, Vtiger, and Capillary have all taken the business of SaaS global.
Three of the top five challenges CRM buyers listed have to do with the total cost of their current solution, including both up front and incremental and hidden costs of ownership. Next in priority for CRM buyers are the challenges associated with the setup and integration of their solution and their reliance on IT to make the needed changes.
Buyers are looking for solutions that are easier to manage from an overhead cost and use standpoint. User challenges are further down the list for buyers — training and user adoption are not top concerns today, but Forrester’s research indicates this is an emerging trend as onboarding and quick time-to value become increasingly important.
Now, ease of adoption is why Freshworks and Zoho became fast-growing companies. While Freshworks reached $100 million turnover in eight years (in 2018), Zoho crossed it in 2010 in 15 years.
Large companies want the following SaaS solutions:
“Today, large enterprises are using SaaS applications not because of the cost advantage, but because of the ease of use and the way they have helped them scale up their customer-facing operations,’’ David Thompson, CMO of Freshworks, told YourStory in an earlier conversation.
This ease of adoption and scalability is perhaps why there are so many unicorns emerging from the SaaS space. The first unicorn of 2020 is HighRadius, a SaaS-based financial software product startup, which raised $125 million in its Series B round of funding led by ICONIQ Capital, along with existing investors Susquehanna Growth Equity and Citi Ventures.
With this, the total funding raised by HighRadius stands at $175 million, with a valuation of $1 billion-and-above. Headquartered in Houston, Texas, with an office in Hyderabad, HighRadius was founded by an IIT Madras alumnus Sashi Narahari in 2006.
The startup was bootstrapped for 11 years and raised its first round of funding in 2017. HighRadius provides AI-enabled software that automates payments, receivables, and treasury processes.
With five unicorns already—Zoho, Freshworks, Druva, Icertis, and HighRadius—the SaaS sector is an exciting space to watch and Indian companies may very well lead the industry globally with their solutions powering small and big businesses across the world.
(Edited by Evelyn Ratnakumar)