"SaaS has great potential" is like a thunderclap echoing through the sky of the software industry. In the current digital economy, enterprises of all sizes are launching the gear of digitalization to accelerate the new qualitative productivity era. As a driver for millions of enterprises to achieve leapfrog development in the new era, software companies are ushering in the golden decade of SaaS under the digital transformation storm. In the face of a new round of industry opportunities, only those who persistently pursue value-driven operations and insist on win-win cooperation can forge the "golden key" to open the door to the golden decade of SaaS.

"The Golden Decade of SaaS Has Arrived, Creating Enormous Business Opportunities of Hundreds of Billions in the Market"

According to the financial news app Intelligent Investment, the natural advantages of SaaS have been greatly amplified due to the needs of major enterprises for cost reduction, efficiency improvement, and refined management, leading to a burst of demand. The Cloud Computing and Big Data Research Institute of China's Academy of Information and Communications has published the 'China Enterprise SaaS Industry Development Research Report (2024)', which shows that in 2023, the SaaS market in China reached a size of 58.1 billion yuan, with a growth rate of about 23.1%. With the continuous development of AI technology, the SaaS industry is experiencing a new round of innovation.

At the same time, the report points out that China's SaaS industry has gone through more than 20 years of development and is currently in a stage of growth and transformation. Due to limitations in infrastructure and technological level, China's SaaS industry started relatively late. From the beginning of the 21st century to the present, it has experienced four stages: conceptual sprouting, exploration and transformation, rapid expansion, and growth and transformation. At present, all parties including industry, academia, research, and application are beginning to explore new models, new formats, and new driving forces, and to explore the integration of SaaS with cross-field technologies such as AI, big data, and the Internet of Things, to help industry enterprises move from "resource to the cloud" to "deep cloud utilization", driving new industry growth.

In addition, in recent years, the empowerment of AI and exploration in overseas markets have brought new opportunities to the development of enterprise-level SaaS industry. The report pointed out that with the 'content productivity' brought by AIGC, the SaaS industry is also facing unprecedented development opportunities, and AI large models are rewriting all existing SaaS. In the future, with the continuous development of AI technology, the SaaS industry will usher in a new round of innovation.

In fact, the growth of SaaS business for major well-known software companies confirms that this market is unleashing tremendous business opportunities. It is reported that in the first half of 2024, including Kingdee, several SaaS manufacturers invested by Kingdee achieved cloud revenue growth of more than 20%. Kingdee Cloud's annual recurring revenue (ARR) from subscription services in the first half of this year increased by 24.2%; Fxiaoshangxiao (CRM SaaS) saw a 23% growth in SaaS revenue in the first half of this year; Duodian (retail industry SaaS) achieved a 24% growth in the first half of this year; Xiner SaaS (HR SaaS) achieved a 24% year-on-year growth in SaaS revenue in the first half of this year.

It is reported that several cloud service products under Kingdee (00268) have been favored by benchmarking companies, including Kingdee Cloud Cangqiong (Next-generation enterprise-level AI platform), Kingdee Cloud Xinghan (Large-scale enterprise SaaS management cloud), Kingdee Cloud Xingkong (High-growth enterprise SaaS management cloud), Kingdee Cloud Xingchen (Small and micro enterprise SaaS management cloud), etc., have provided enterprise management cloud products and services to more than 7.4 million companies, governments, and other organizations worldwide.

According to industry analysis, the growth of SaaS businesses of many well-known software companies is driven by multiple bullish factors. First, it is the rigid demand brought by the development of the digital economy and the digital transformation of enterprises. Digital management is increasingly being valued. Second, under the SaaS subscription model, enterprise IT spending has decreased significantly, which can significantly reduce financial pressure. Third, the maturity and security of the products and services of mainstream SaaS companies in China have been continuously improving, gradually meeting the needs of most enterprises for IT systems. Fourth, the current Chinese economy is in a stage of "shift", and new high-quality productivity represented by AI will become a new driver of high-quality economic growth in the future. AI will bring disruptive changes to the SaaS industry, presenting both challenges and huge opportunities for SaaS companies. Those who can innovate with customer-centric approach and turn AI from a concept into a practical application will gain greater growth momentum.

In the face of the bullish factors driving the market, Xu Shaochun, Chairman and CEO of Kingdee International, said at the semi-annual earnings conference, "For our software industry, it is not the "most dangerous moment", but a golden decade for Chinese enterprise software SaaS services has arrived, and of course, this is also a golden decade for our development at Kingdee."

Value operation + win-win cooperation to create a "golden key" for the golden decade

Currently, it is the golden decade for Chinese enterprise software SaaS services. However, the golden decade cannot be achieved by simply lying down. It requires more effort.

Firstly, SaaS companies need to focus on value operation: to achieve success for customers and for themselves. Similar to the domestic new energy vehicle market, domestic SaaS companies have always been "bargaining on price", and even some vendors have chosen irrational super low quotes to win market competition. Although they have won customers, they have incurred continuous losses and faced huge financial risks, resulting in "injuring the enemy a thousand and self-damaging eight hundred", which is not worth the gain.

Research and analysis indicate that SaaS requires software vendors to invest more resources in developing products, and the cost of customer migration is low. Once customer needs are not met, customers will quickly churn. Therefore, continuous value enablement is the long-term winning strategy for SaaS software.

Therefore, what SaaS companies really need to focus on is not price, but value: how to make their products more powerful and create greater value for customers, which truly determines the pricing and market competitiveness of the products. When products truly provide value to customers and bring new value increments, there is naturally room for price increases. For example, in August last year, Salesforce raised the average price of Sales Cloud, Service Cloud, Marketing Cloud, Industries, and Tableau by 9%. Behind the price increase, industry analysis pointed out that it created value for customers. With the help of Salesforce, customers can deploy innovative technology to collaborate with a company in the fields of sales, service, marketing, and business, thereby reducing complexity and quickly realizing value.

For example, when related institutions conducted a survey on the pricing calculation of SaaS products, the data showed that the sales-based approach has the highest value perception. However, the prerequisite is that SaaS companies can demonstrate that the growth of sales is directly related to the product. Therefore, it can be seen that for SaaS companies, what they should really value and continuously cultivate is the product value.

Secondly, SaaS companies should focus on the implementation of AI: AI innovation that aims to solve customer pain points and drive the intelligent transformation of the software industry. Currently, AI brings huge opportunities to the SaaS industry, but it also imposes high requirements on enterprise innovation. Products that innovate for the sake of innovation will not have a market. Only AI applications that can help enterprises solve real problems can gain customer recognition.

For example, Bluefocus Intelligent Communications Group stated in this year's interim report that according to internal research and statistics, Bluefocus employees have an average daily usage time of 3,000 hours, achieving 100% coverage of the "human + AI" work mode. Through AI technology, business productivity and innovation capabilities have been significantly improved, resulting in an overall increase in business productivity by approximately 55%.

Another example is the Haier Employee Activated Platform, which combines the large-scale model platform capability of Kingdee Cloud · Cangqiong GPT with the functionality of Kingdee Cloud · Xinghan Human Cloud. It achieves accurate identification of candidates based on positions, not only helping HR find suitable candidates for positions, but also showcasing suitable internal positions to employees, allowing employees to choose and move autonomously. The Activated Platform significantly increases the proportion of internal talent self-supply, reduces the loss of outstanding employees, and truly improves the efficiency of human resource allocation and stimulates organizational vitality.

In addition to value-based operation, for SaaS companies to open the doors to this golden decade, embrace the huge market opportunities, and achieve mutual success, they must join hands, cooperate, and walk the path of ecological development by promoting the spirit of altruism. Only by working together with partners can they achieve stability and progress.

Industry insiders point out that the core of the SaaS model lies in standardized products. However, SaaS companies cannot meet the diverse needs of different enterprises. Therefore, the more appropriate approach is for SaaS companies to focus on their core strengths at the development level and polish their products to perfection, while other aspects can be achieved through partnerships. At the marketing level, it is important to treat channel partners well by providing necessary help and support in terms of delivery and market development, thereby achieving mutual success with partners.

In the vast and turbulent market, the key to unlocking the golden decade of SaaS lies in open-mindedness, altruism, and a focus on value. These are the "golden keys" to open the door to software SaaS.