The transition from traditional on-premise software to software as a service (SaaS) is creating a new kind of software companies, with predictive recurring revenue streams and scalable business models. While the SaaS penetration rate varies between countries and applications, the transition is far from finished in most cases.
Key industry drivers
High-speed internet everywhere
Widespread high-speed internet is vital for delivering software as a service (SaaS). As the software is hosted in the cloud, a fast and stable internet connection is necessary for SaaS to compete with traditional on-premise software in terms of speed and availability. The Nordic countries are all among the global top ten regarding average internet speed. According to The Swedish Post and Telecom Authority (PTS), 82% of Swedish households and 76% of Swedish workplaces had access to a 100 Mbit/s internet connection in 2018, while 99.99% of Swedish households and workplaces had access to 10 Mbit/s.
Improved and standardized web-based technologies
Recent improvements in web-based technologies have increased the competitiveness of SaaS. The improvements include efficient protocols regarding both security and integration solutions. Also, thanks to standardization and increasing interest in web development, the cost of a new SaaS solution has gradually declined.
As data and software are stored in the cloud, users can access the software from anywhere with any computer. The user only needs an internet connection and a web browser. Many SaaS solutions also support phones and tablets.
Much on-premise software is built for a single operating system and may need on-site visits by specialists for installations of updates. SaaS solutions typically work with most operating systems as it is running in a web browser. Also, with SaaS, updates and fixes are implemented continuously, barely noticed by the user.
Several SaaS companies have listed on the Swedish stock markets during the last years. While many have already accumulated a significant number of customers, solid growth opportunities remain, just not in terms of customers, but foremost in additional sales to their current user bases. Also, as internet speeds are rising in Europe, export opportunities arise.