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SaaS – What’s in for integrated hardware/software companies?
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Dr. Michael Müller
Partner / Germany
Hamburg
Point of view
By Dr. Michael Müller, Dr. Robert Schenk and Elizaveta Akhimova
At a glance
Following the example of software-only companies, integrated technology companies (i.e. delivering hardware, software, and services to their customers) show increasing interest in Software-as-a-Service (SaaS) models.
However, compared to software-only companies, this market segment is less mature yet:
The biggest share of integrated technology companies (53%) currently offers both options, SaaS and on-prem software, while about 1/3 of companies still doesn’t have a SaaS offer at all
Integrated technology companies plan to almost double their SaaS revenues within the next 5 years (from averagely about 32% of software revenues to 62%). By then, SaaS will be the dominant revenue stream within software for more than half of the companies
Data privacy and security, revenue model shift to subscription, and HR capabilities as well as skillset are the top 3 hurdles for integrated technology companies when establishing SaaS
3 key advantages of expanding the business model through SaaS are being reported by integrated technology companies: simplified software updates/upgrades, positive marketing effects on brand image, and an increase of annual recurring revenue (ARR)
The customers predominantly profit from reduced IT complexity, simplified software version management, and more liquid funds for profitable investments in the core business (shift from CapEx to OpEx).
