There’s a very good chance you used multiple SaaS applications today. We don’t blame you. The days of the do-it-all SaaS app are long gone. Instead, there are a million SaaS apps for anything and everything you can think of.
In other words, the SaaS market is currently extremely fragmented.
Unfortunately, this fragmentation is coming at the expense of the end-user.
The B2B SaaS Gold Rush
In 2011, Marc Andreessen, co-founder and general partner of the venture capital firm Andreessen Horowitz, declared that “software is eating the world”. The thesis was simple: because the internet and internet-based companies required a lot of software to function properly, software was due for its own gold rush.
It turns out that Andreessen was spot on. Modern companies use a lot of software:
Because companies today use so much software, they also spend a lot on SaaS. This holds true regardless of if they are small:
An established company:
Or an enterprise:
This boom in business SaaS spending resulted in a meteoric rise in the SaaS market from ~$6B in 2008 to ~$150B in 2020.
The Fragmentation Of SaaS
The traditional way of doing SaaS was to take one specific issue, reach PMF, and then own that ‘vertical’ by shipping more features (establishing a feature moat), ultimately growing as much as possible to dominate that market (establishing a market moat).
The result today are that apps are oveloaded in features and enterprises are bombarded with hundreds of SaaS solutions for each of their problems.
A great example of fragmentation leading to over-saturation in SaaS is marketing SaaS apps. First, take a look at the number of marketing SaaS apps in 2015:
Already seems like overkill, right? Well, now look at the chart for 2020:
In just 5 years, the number of marketing SaaS companies went from 1,875 to 8,000.
Do we really need 1,875 marketing SaaS companies, let alone 8,000?
We don’t think we do.
In fact, we believe this fragmentation is quite harmful to the end-user: founders and businesses.
The True Cost Of Fragmentation
As consumers, we are often taught that optionality and fragmentation are good. There is some truth in this. When consumers have a plethora of options, it breeds competition which, in theory, makes the product better and cheaper. And when products are fragmented, they can better focus on a core niche, often leading to superior products.
However, in SaaS, too much optionality and fragmentation is a bad thing. It’s unnecessarily costly and inefficient.
In 2021, the average number of SaaS apps used by organizations was a staggering 110. Beyond the fact that’s 110 apps that you have to pay for, managing 110 different apps is a logistical nightmare. You likely need a dedicated team and a specific SaaS app just to manage your SaaS apps! The costs add up quickly, as you see in the amount companies now spend on SaaS.
It is also highly inefficient to manage 110 different SaaS apps. That is because these apps are not interoperable. In other words, they are unable to communicate with each other. It is often impossible to transport what you’re doing in one app to another app. The result is instead of enjoying one straightforward and unified user experience, you find yourself scrambling between apps and tabs looking for the information you need while paying a fortune just to manage your SaaS stack.
This is the current SaaS experience, and, frankly, it’s not fun. However, the solution isn’t to overload each SaaS app with features. That just leads to headaches:
There has to be a better way…
Frame: The OS Of The Future
What people really need is a minimalistic and interoperable SaaS app. This would lead to:
- Less SaaS spending, as the app would be a unified and interoperable experience, removing the need to spend on a 100 different apps.
- A productivity boost, as people would be able to actually work across apps and teams, instead of spending all their time managing their SaaS stack.
- Higher security, as it is easier to keep one app secure rather than 110.
As it turns out, this is exactly what Frame is building: a suite of minimalist collaboration apps built for teamwork and a seamless cross-app experience.
We will have much more to say on Frame in future articles. But, for now, if you want to use Frame, click here.
Until next time.
