Bye-Bye Vertical SaaS, Blame it on No-Code

The vertical SaaS market, once seen as the future of enterprise software, will soon be a footnote in software history. No-code has stepped in disrupt its temporary dominance.

When you can build a CRM system in days, not months; deploy it in hours, not weeks; and sustain it for one-tenth the cost of a premium dedicated SaaS solution, it signals a sea change.

No-code is doing precisely this.

StableDiffusionXL: Vertical SaaS vs No-code

TLDR;

• Excessively high per-seat SaaS costs are on the chopping block

• No-code is to blame

• A single no-code seat license can displace multiple vertical SaaS seats

• Vertical SaaS apps are not positioned to embrace workflow agility, AI or automation agility

Vertical SaaS platforms were built with the best intentions of providing extremely focused solutions. But they come with costly software engineering and support costs, e.g., a relatively high seat price. They became the new, modern way to expand performance and reduce IT reliance while compressing the DevOps cost. Ten years ago, this made a lot of sense, given the alternatives.

But this movement also drug along one element of the legacy, old-school history - high per-seat prices. It’s not uncommon for vertical SaaS platforms to charge $5k per year for a single user.

Duplicitous No-code

With no/low-code platforms, there’s a multi-whammy economic effect that begins to chip away at the status quo for SaaS apps — a seat license can displace multiple vertical SaaS solutions, and no/low-code platforms are increasingly adept at shapeshifting to meet as good, or sometimes better performance than the vertical SaaS apps they mimic.

No-code is a platform; Vertical SaaS is a solution

SmartSuite, for example, can provide CRM and compliance functionality, but the per-seat cost isn’t doubled when two critical apps run on the same SmartSuite license. The economy of scale is more cost-effective if an enterprise can replace two or more vertical apps.

No-code Shortcomings Don’t Matter

We often find many cases where no/low-code solutions fall short as compared to their vertically designed SaaS cousins. Most no-code apps, however, are good enough to get the job done. Many of the features in a vertically optimized SaaS offering are not used. To say that a no-code solution reaches only 80% of the product it is designed to replace is irrelevant when the 80% threshold represents 95% of the most essential features workers use daily.

Often, no-code shortcomings are actually advantages. A good example is workflow agility. Vertically aligned SaaS solutions tend to offer rigid assumptions about workflows in a specific field. No-code breaks in favor of a green-field re-evaluation of the workflow and opportunities for automating parts of the flows. Vertical SaaS products often constrain the ability to shape the solution in granular ways.

Critically, most no/low-code platforms are platformative, SmartSuite especially, but Airtable is no slouch when combined with some of the aftermarket tools. This speaks volumes to using no-code to displace multiple enterprise SaaS solutions. If you believe you’re in the “platform” business, this is probably one of the most useful and reflective software development rants I’ve seen in a long while. It’s long and deep, but it’s worth reading if you care about building applications that survive more than a few months.

Tech Windshear

There are forces in the SaaS apps realm that are racing in opposite directions.

Corporate leaders are pushing hard to suppress OpEx because interest rates are high, funding for expansion is non-existent, and we’re smack in the middle of an era where you earn, or you die.

In the opposite direction, business leaders have identified AI as a potential pathway to lower headcount, improve worker output, and lower software development costs. By inherent shape-shifting capabilities, today’s crop of no/low-code platforms are positioned to take advantage of generative AI today - not in a year or two when vertical SaaS apps can be re-engineered to embrace it.

Takeaway

Here are my three key takeaways from these observations: