Why We Love How AI is Ultimately Changing the Nature of SaaS

Michael Sifueli Kisanga
November 13, 2024

Why We Love How AI is Ultimately Changing the Nature of SaaS

 

SaaS is changing how software is distributed and used worldwide. In its infancy software was Open Source. This meant the software came with its source code. This all changed with Microsoft when Bill Gates introduced the idea of the proprietary software model. This ushered in the era of paid software, eventually leading to the modern-day SaaS industry.

 

What Is SaaS?

 

SaaS is an acronym for Software as a Service. It is a model used for software distribution where users pay a monthly subscription fee instead of purchasing the software. This meant users do need to buy, install and run the application on their computer. they can simply access all the features online and from any device. Users also do not need to maintain or update the software. With SaaS, solutions that are simple to set up for both everyday users and larger organizations are made available.

 

The Evolution of SaaS

 

The history and evolution of SaaS are debatable at most just like the history of computers. SaaS is a technology that was not developed in a single instance. In the 1960s computer technology progressed rapidly but other costs were still too expensive.

 

This is one of the reasons why software as a service came into existence. Eventually, the development of MIT's Compatible Time-Sharing System was developed. Some regarded this system as the early form of SaaS where businesses had access to modern computer systems at affordable costs.

 

From the 1960s to the 1980s IBM introduced the concept of 'rented' computing hardware. At the time, IBM started offering organizations such as banks, and large businesses storage spaces. Large organizations considered this choice a more cost-effective alternative.

 

SaaS3.0 vs Traditional SaaS Models

 

As SaaS evolved from its more traditional version to the current new and improved version. SaaS 3.0 is simply smarter, better, and faster. Over the years SaaS has evolved to a different revenue model as well as offer more features to its customers, especially with the integration of AI.

 

SaaS evolved through 3 models. During SaaS v1.0 the industry was mainly dependent on revenue alone. SaaS v2.0 though changed this to revenues and online payments. Finally, SaaS v3.0 incorporated different financial services and AI in the development process.

  

Artificial Intelligence Introduces a more Effective Development Process using AI.

 

The use of Artificial Intelligence in SaaS has had positive impacts, especially in the development process. This is especially true in design, debugging, integration, and testing. Other areas that have had significant improvement include security, scalability and performance.

Debugging 

One of the most exciting features of AI technology is its ability to automatically debug code. Most SaaS products use massive lines of code and this tends to be a major problem for developers since finding bug scan be a strenuous process. AI plays a big part in interpreting different code languages, assessing them for errors and making the necessary changes.

 

Microsoft has developed a system that can automatically predict source code files that carry a higher risk of a bug. The system can then inform developers before deploying the source code. Sketch2Codeis also a SaaS platform from Microsoft, that helps users turn sketches into HTML code. While the company Reliable also has a SaaS product that turns sketches into HTML and CSS code. All this entails quick deployment and less liable damage that would otherwise be created from source codes that would crash.

UX Design 

Enhanced user experience is critical in the digital world. With AI, SaaS models can be designed to fetch responses against client queries and then handle the data. Finally, they can offer better insight into user requirements and concerns.

 

Understanding consumer expectations can be difficult for most businesses. Still, with hyper-personalization, SaaS services can recognize user expectations and make appropriate changes. With the use of individual user journey maps, big data, analytics and personalized content, hyper-personalization helps in attracting new customers, reducing costs and driving profits.

 

AI technology helps businesses evoke meaningful responses from users. It also helps build lasting relationships, increase conversion rates and deliver a unique user experience. This means businesses grow customer lifetime value and increases conversion rates. For example, Reebok uses algorithms to analyze data sets which it then uses to create automated lists for potential buyers.

 

AI can be used to design and develop user interfaces based on previous user interactions. This is important especially when it comes to layout exploration. Layout exploration is the process of trying different layouts for different pages in web designing. Finding the best fonts and colors for a website is crucial in layout exploration. Artificial Intelligence tools can be used to implement best practices for this. By analyzing customer data, ML can create the perfect balance between a SaaS product's brand and its target market.

Security 

In the SaaS development process, AI can also be used to reduce the threat to security. Cyber security is a major concern to any tech business and as technology progresses so does the threat to data increase. SaaS services are constantly updating their security features to preserve data and integrity.

 

AI can assess human behavioral patterns and factors while analyzing past bugs and errors. This leads to the development of newer security patches that can offer effective security measures. AI can now detect and isolate new malware before it affects an infrastructure using predictive analytics.

 

Artificial Intelligence Improves Analytics

 

Data is the most valuable commodity in the Digital world and this is more so in the SaaS industry. SaaS companies must keep track of their data to make actionable data driven-decisions. SaaS companies strive to outperform their KPIs, so they depend on data analytics to understand their ecosystem. This is useful especially for growing their client base.

 

AI Data Analytics can help SaaS companies in the following areas:

1.      Customer Segmentation – understanding customers is a very important aspect of any business. Data analytics helps SaaS companies understand user behavior, to segment customers based on the company's desired metrics and KPIs. As a result, companies can boost their customers' loyalty and revenue because of a better User experience. AI analytics can analyze which customers have the highest lifetime value (LTV) to find out which customers are more valuable. This information is then used to create brand messaging around power users' favorite products.

2.      Cost Reduction – AI analytics helps SaaS business cut costs by helping them discover what works and what does not work. This is used to discover glitches and cost spikes in cloud computing to forecast future costs.

3.      Improving metrics and KPIs – Predictive analytics analyze market behavior to provide forecasts. This helps SaaS companies set their KPIs and metrics.

4.      Predicting the future – AI analytics can also be used to fine-tune how a SaaS company responds to them. Most SaaS Business Intelligence tools use features like data visualization, platform functions, online analytical processing (OLAP) and many others, to project sales from different customer segments and take preventative measures.

5.      Monitoring Campaigns – Email campaigns for marketing purposes can be greatly improved with AI. AI marketing can help with automation, cost saving, increased ROI, increased personalization, and smarter and faster decision-making.

 

Predictive Analytics

 

Predictive analytics uses tools and techniques to build predictive models and forecast outcomes. Some of the methods include advanced mathematics, learning algorithms, statistical modelling, data mining and descriptive analytics.

 

The process builds upon two earlier types of analytics. These are diagnostic and descriptive analytics. For example, Descriptive analytics may be used to document items like the number of goods sold. While diagnostic analytics analyzes that information to find out which days had the most sales. Predictive analysis may include neural networks, decision trees and support vector machines.

 

ML can automate predictive modelling by generating algorithms to look for behaviors and patterns. Behaviors and patterns are identified by analyzing intent recognition and trend prediction.

 

Intent recognition unspoken or written inputs and classifications that are based on user intent. It is one of the main features of chatbots that helps in customer support, sales conversions and other activities. It is ideal for managing and running campaigns, emails, forms and surveys to capture data and understand customers.

 

Trend prediction uses modern SaaS tools that use advanced predictive analytics capabilities. These capabilities allow decision-making which identifies risk data patterns and opportunities. Advance ML SaaS monitors user behavior and preference on different digital channels, analyzes them, and then triggers events/actions to engage users on websites and suggest the best course of action. With this feature, AI can recognize trends in advance and take the necessary action to maximize business value

 

Artificial Intelligence Marketing

 

It is predicted at the end of 2025; the AI industry would be $190 billion industry. In the Digital Marketing world, AI is changing how tech companies reach their audience.

 

Many brands have realized the benefits of using AI to interact with their target market. Companies use AI to construct simulation models through suggestions. With AI, companies can suggest products to their customers, based on page views, previous purchases and inquiries.

 

There are many AI marketing strategies which companies use to reach their audience. These strategies are used in the business's back and frontend (customer-facing side).

 

On the backend side, companies use AI to:

1.      Develop customer profiles,

2.      Forecast demand products,

3.      Do programmatic ad buying as well as many other tasks.

 

On the front-end side, companies use AI to:

1.      Improve customer experience

2.      Make pay-per-click advertising more effective through pricing

3.      Make more sales and strengthen the brand through content creation

 

Ways in which AI is Revolutionizing Digital Marketing


Content Creation

One of the most interesting aspects of AI in digital marketing is content creation. Recently AI has been used to create content, especially written content. This is done by anticipating subjects that are likely to draw attention and delivering material around those areas.

 

Since content creation is one of the biggest challenges in Digital Marketing and creating quality content takes time. So, as we speak AI can write articles,as well as emails and even social media posts. In both cases, the content thatis created is purposeful and customer-focused and intended to be useful. Byknowing which blog posts customers read, which pages customers visited, whichemail they interacted with and more,

 

AI can intelligentlyselect the content that most likely appeals to specific users, using what iscalled 'churn prediction'.

 

Customer Experience

AI provides the ability to improve on existing products as well as services and this in turn improves customer experience. SaaS companies are currently using AI to prioritize new product development and customer care.

 

This is done by:

1.      Emphasizing areas like chat boxes

2.      Reducing revenue churn

3.      Image recognition

4.      Service and product recommendation


All this, results in:

1.      Personalized advertising across digital platforms

2.      Increased precision context

3.      Increase in sales.

 

Pricing

Most marketers are relying on machine learning to define more competitive relevant price points. The technology is also being used to determine price elasticity for each product.

 

While at the same time factoring in:

1.      customer segment

2.      Channel segment

3.      Sales period

4.      Overall product pricing strategy.

 

Enhanced Time Management with AI-Powered Scheduling Platforms

 

We are now at the beginning of the third era of SaaS and we are calling this SaaS 3.0. This is the phase in which bleeding-edge technologies like Artificial Intelligence are becoming critical leads of SaaS platforms - Forrester Research

 

More and more people globally are working remotely at least once a week. Productivity Software and cloud collaboration have become crucial in the workplace. These tools have gone through “artificial evolution” and the desire to collaborate remotely has fueled the need for such tools since they result in better productivity. The latest development in Software has meant that most of these tools are powered by AI.

 

Meetings are the most productive way of hampering work productivity

 

Since most companies invest a lot of time in scheduling a meeting, so that stakeholders fit well within the timeframe, software providers have incorporated AI into their products to reduce time wastage.    

 

For example, some SaaS AI bots would automatically analyze the invitees’ availability within their calendars. Based on the information collected, it would then invoke reminders and put it into context for all the participants. One of the platforms that have gotten popular due to its efficient scheduling and hyper-intelligent reasoning engine is X.AI. It knows how long and when you would like to meet.    

 

The Revolution of AI Technology and the Internet of Things is here to stay

 

AI Technology has had an immense impact on our everyday lives. Every aspect of our lives has in some ways been affected by artificial intelligence. Every industry from Medical, Automotive, Cybersecurity, E-Commerce and many others has been affected by artificial intelligence. SaaS being part of the Internet of Things has also felt the effects of AI as well as its benefits. From Marketing, customer personalization, security, analytics and many other aspects, SaaS has benefited immensely from AI and it would be interesting to see what the future holds.

Michael Sifueli Kisanga
November 13, 2024
5 min read