Software as a service (SaaS) companies are characterized by low barriers of entry, low-cost startups and quick growth, a business model attractive to investors. In San Diego, these companies may fly under the radar, but some in the industry say that’s about to change.
San Diego’s SaaS companies are gearing up for 2016 with data analytics, prepackaged bundles and collaboration. Software companies offer businesses, and occasionally consumers, technology using a subscription or monthly fee through a web-based application or cloud services.
“More money is being invested in startups and technology every day,” said Lars Helgeson, CEO of GreenRope. “Companies and their employees are leaving behind their fear of software as a service and are quickly learning the benefits of being able to access data from anywhere in the world.”
GreenRope is a CRM multi-channel marketing automation tool that includes event management, knowledge management and more in a single platform. Helgeson said more products will need to connect to smart phones and watches and focus on design, especially now that people are more educated about technology and demand real-time, easy-to-use software that can automate their processes.
The medical device, diagnostics and telecommunication clusters in San Diego keep the market for software diverse and stable, according to Kevin Carroll, executive director for Tech San Diego. Companies continue to want data analytics, and this model bodes well for San Diego.
University research and larger tech companies in San Diego, such as Qualcomm Inc. and ViaSat Inc., are good signs of strength, and San Diego is well positioned for software development, said Caroll.
After five years of M&A activity, Carroll said medium-sized companies continue on a nice growth trajectory. Software companies who service small to mid-size companies power the economy.
San Diego industry front runners include Underground Elephant, Zeeto, Abacus Data Systems and Classy. All have annual revenue of more than $10 million and more than 50 employees.
Zeeto’s Head of Product Marcie Gately said small companies serving larger ones expand their reach more easily than traditional licensed software models in San Diego. She noted that San Diego boasts one of the country’s pioneering SaaS companies from the late ’90s, WebSideStory.
“The startup community growing here can hit the market more quickly than in the past,” said Gately. “With that history, continuous expansion of San Diego’s technology reputation and access to talent coming out of our local schools, we are set to promote more startups and enable established business to broaden their businesses with SaaS product offerings.”
Fabrice Gould, CEO of Diggen, a marketing integration platform that helps companies manage data-driven enterprises, said it’s taken San Diego almost five years to reach this level of entrepreneurship and collaboration.
However, San Diego is the ideal size to test out the market and communicate with consumers, Gould said. He said there are more than 200 all-size SaaS companies in San Diego. He and Startup San Diego are compiling a list for San Diego.
Dina Moskowitz founded SaaSMax after she saw a need for a middleman between SaaS companies and resellers. She likens SaaSMax to a match.com for business cloud software and resellers.
Moskowitz said there is opportunity for SaaS companies to grow their sales by leveraging indirect sales channels through IT and technology consultants, who are advisors for other companies. The consultants often bundle various software for their clients.
Paula Selvidge, CEO of PerfectForms, a development platform that enables businesses to build forms, workflow applications and reports without coding, said SaaS will continue to grow because of increased demand for rapid application development, reduced startup and maintenance costs, constrained IT resources, growing demand for accessibility due to remote workforces and funding being favorable to SaaS-focused startups.
Samantha Urban, founder/CEO of Urban Translations, a tablet-based digital menu ordering platform, said more SaaS companies will host apps on the cloud in 2016.
“A lot of people, what they’re doing is mimicking models that work,” Urban said. “SaaS company models, our business models, they work.”