It wasn’t so long ago that software companies began shifting their business models to offer subscription pricing and provisioning.
The year was 1999 and the first company through the gate was Salesforce. While other companies had experimented with a CD-ROM/subscription model split, Salesforce was among the first to adopt the SaaS model right out of the gate.
Software subscription models are everywhere now, changing business, transforming education, and revolutionizing the way people think about everything from transportation and security to healthcare, entertainment, and a whole lot more.
Subscription business models in general have become just as ubiquitous. You can now subscribe to coffee at Panera, meal plans with HelloFresh, and even household and personal care items from companies like Walmart and Amazon.
SaaS and the subscription business model continue to expand for the simple reason they make life easier and more efficient for people. And from a business perspective, they provide a reliable recurring revenue model with a lower barrier to entry.
Here are seven ways SaaS and the subscription business model have changed—and continue to change—the world we live in today.
1. Business and the company-wide revolution.
The world of business has a long, continually evolving relationship with software that goes back about as far as the tech industry’s origins. This relationship has only accelerated in recent years thanks to:
- the overwhelming shift toward digital revolutions—70% of companies have or are developing digital transformation strategies, and
- the enhanced need for flexibility most businesses have felt in the wake of the Covid-19 pandemic.
Cloud spending, in particular, appears most robust with a forecasted growth rate of 18.4% in 2021.
Thanks to SaaS, businesses have constant access to real-time data that feeds into their operations and decision-making. They’re also able to automate and optimize tasks and processes across their entire organizations, all while freeing up time for their own teams to focus on strategic work rather than manual-heavy processes.
As Roy Stephan of PierceMatrix puts it, “With the cloud, individuals and small businesses can snap their fingers and instantly set up enterprise-class services.”
Whether it's mechanizing marketing nurture campaigns, streamlining sales acquisition efforts, automating the end-to-end billing and collections process—or optimizing pretty much any other part of business operations you can think of—companies are using SaaS solutions to build agile and scalabile technology stacks to ignite their growth journeys like never before.
2. Education: anywhere, anytime.
Like business, education has had an ongoing relationship with SaaS that stretches back for decades. Districts use SaaS for administrative management, while classrooms use it to make learning more efficient and effective.
When Covid-19 took 1.2 billion students globally out of the classroom, the need for a flexible, robust tech stack in the educational space became even more apparent.
During remote learning, cloud-based classroom spaces like Google Classroom enable students to access assignments and other resources in real-time, while teleconferencing platforms like Zoom enable teacher and student interactions to continue uninterrupted.
However, remote learning is just the tip of the iceberg.
Businesses like Kahoot provide game-based learning opportunities for students on a subscription basis, while the company Coursos provides pre-arranged micro lessons.
As educator David Warlick puts it, “We need technology in every classroom and in every student and teacher’s hand, because it is the pen and paper of our time, and it is the lens through which we experience much of our world.”
3. Transportation, fleet management, and the ride-sharing phenomenon.
The ride-sharing industry has an estimated worth of $61 billion—a figure that will only continue to increase thanks to the 25% of U.S. citizens who are monthly customers of ride-sharing. Indeed, this is just one of the many indicators that society's notion of ownership as a whole has shifted in recent years.
Why buy when you can subscribe?
While ride-sharing is an obvious way technology has transformed the transportation sector, it’s only part of the picture.
Manufacturers continue to integrate software into vehicles through built-in connected GPS services and the increasing prominence of autonomous driving features.
There’s also telematics—a technology that has been embraced by over 86% of fleets in the U.S., reducing fuel and maintenance costs while boosting safety in the process.
Hop over here to read more about the growth of telematics and the connected customer.
Whether you’re a professional driver, or just an average person trying to get around, the space has changed forever. It’s pretty likely you regularly encounter SaaS in some capacity while behind the wheel.
4. Entertainment and the streaming revolution.
Where to even begin with entertainment?
From the customer end, entertainment has shifted almost entirely toward a SaaS subscription-based model, turning media giants into subscription businesses. Massive blockbusters like Disney’s Black Widow now experience simultaneous theatrical and video-on-demand releases, while everything from music to television is available in unlimited quantities for a modest subscription fee.
- Entertainment-oriented SaaS is so wide-spread only 28% of U.S. adults claim to have never used it—a figure that shrinks by the day.
- On the production end, SaaS is equally prominent, providing businesses with real-time viewer analytics, as well as the ability to pivot on a dime to adapt to changes in overall trends.
For example, the streaming service Spotify launched a very abrupt shift into podcasts to match subscriber interest, quickly accumulating content from big-name figures like Barack Obama.
According to the company itself, this rapid adjustment translated to a 24% increase in subscribers. While lots of work went into Spotify’s transition, it wouldn’t be possible without a sleek tech stack.
5. Journalism: facts as a service?
Technology has significantly disrupted the ways the general public consumes information.
In a world where more than half of all Americans get their news—at least some of the time—from social media, it’s clear the traditional mode of story-driven journalism is no longer the only game in town.
Information as a service is possible in no small part thanks to SaaS that provides granular data, not just on what’s happening in the world, but also on what people think about it. This up-to-the-minute information enables journalists to adapt their content to the changing demand. It also enables programs like Apple's Siri or Amazon's Alexa to answer news-related questions in several short seconds upon request.
As writer Ken Auletta put it, “The digital revolution is almost as disruptive to the traditional media business as electricity was to the candle business.”
Yep, even healthcare has hopped on the subscription business model.
Cloud-based healthcare data management, currently tracking to reach a $62 billion value by 2025, has revolutionized the way hospitals share and manage their patient information.
Through information sharing systems, healthcare providers can instantly access health records and other key data in real-time.
And of course, the cloud is just one of the ways SaaS has found its way into the healthcare industry. AI allows for easier, bot-generated communication with patients, while blockchain and other technologies work to keep all of this new information safer.
And for individuals who prefer a more convenient, anywhere, anytime healthcare experience, there are now even subscription options that enable you to access liscensed doctors remotely for medical advice and treatment.
7. Food, farming, and the biggest innovations since the plow.
Even the rustic farmstead uses SaaS and the subscription business model to change the way food is grown and produced.
In 2020, $300 million worth of investments went into agritech.
Farmers can now use technology to water crops with drones, automate greenhouse condition adjustments to keep them in tune with plants’ needs, and receive general analytics on the overall health and wellness of their operations. And they can monitor and track it all using subscription-based software solutions.
It’s estimated food production will need to increase by almost 70% in the next thirty years. Not only do these developments help farmers cater to the overwhelming uptick in projected need, but they also add efficiency to farming processes.
Between analytics and automation, SaaS might be the biggest thing for agriculture since the plow.
Then there’s the subscription model that’s helping get the food from the farm to the table. Services that enable either for the delivery of groceries or even pre-measured ingredients for high-quality meals.
All this and more for the subscription business model
Breaking SaaS and the subscription business model’s influence up into tidy categories is an effective way to explain its overwhelming development and impact on our world and society. The truth, however, is that software’s penetration is interconnected and near-universal.
A child may be driven to a school that uses smart classroom technology, in a car that parallel parks itself, while streaming the soundtrack to Frozen 2 from their parent’s Apple Music subscription. Meanwhile, the subscription service, the classroom software, and even the car itself collect data, which is processed by the companies managing the products using their own SaaS-based tech suite of tools.
Stir in nearly unlimited subscription options to physical items, and it becomes clear the world of business and consumerism as a whole has experienced an existential shift towards on-demand goods and services how and when customers want them.
Software and other successful subscription-based technology haven't just changed the world. In many ways, they run it.