Predictions and Trends for the Future of SaaS Software

Margaret (00:08)

Welcome to the Kodaris Community Show with your hosts, Tony and Margaret and the occasional friends stopping by. This is the podcast where we explore how innovation and technology is reshaping distribution and the supply chain as a whole.

Discover how technology is making companies more efficient and profitable, making their customers happier and is paving the way for our future. Join us for insights from industry experts, interviews with innovators, and actionable ideas to stay ahead in our rapidly evolving world.

Margaret (00:42)

This week, Tony and I discuss the consolidation of point solutions and Tony's predictions on where software is going.

This is our conversation.

Margaret (00:55)

Tony, you've been in software for a while, right?

Tony Zakula (01:01)

Are you calling me old?

Margaret (01:02)

I'm not calling you old, no. I knew you were gonna take it that way.

Tony Zakula (01:07)

Alright, when I was in Silicon Valley in my 30s, they called me old, so it's fine.

Margaret (01:12)

Yeah, 30s feels old for me. So I already feel like I'm getting too old for this, but, you in Silicon Valley, you were there, what was it? 2012?

Tony Zakula (01:15)

Yes. 2010, 2012, somewhere around there.

Margaret (01:28)

2010. Yeah, I was graduating college. And talk to me a little bit about what it was like back then in Silicon Valley, what you were seeing, what the kind of overarching thought about business software was.

Tony Zakula (01:48)

Yeah, well, I mean, there was obviously a lot of innovation. There's always innovation going on. I think in those days, there was a lot about…business software was typically installed, right? So, it was the whole Salesforce phenomenon of software is dead. You sell in the cloud, you sign up, enabling at a price per user that users could just start using it.

So there's this pretty big transition going to SaaS platforms. Of course, anytime there's a revolution in the software industry, it kind of changes how you think about things, how you do things, how you build and write things. The enterprise systems were very slow to adapt or adopt because businesses are so heavily dependent on them.

They're typically installed. They might be customized or implemented by integrators. So going to the cloud was challenging. I think that, you know, early on we focused on the simple use cases and the whole kind of selling direct to employees and building champions and convincing people this was a great way to go was kind of one of the focuses as well.

And then just, you know, making things magical for the users, like taking a picture of a receipt with your phone, which now could take pictures, right? And somehow something happened to that and it became data.

It was all very cutting edge and interesting for users and with how software was scaling into the cloud, hardware was scaling, phones were getting new capabilities every month or so, every couple months it seemed like. It was a very interesting time for how we transition from a world of desktops to a world of clouds. It was a lot of change.

Margaret (03:51)

Yeah. Yeah. Well, it's interesting. I kind of, around that same period, started working at Invision and, for me, we had a similar motion to Expensify, which now we call PLG, right? Product led growth. But at the time we didn't even know what to call it. We knew we were doing something different by having designers be able to have a free version of the software and then eventually going in and selling enterprise deals to larger companies.

But we were calling it, like, B to C to B, or we were calling it, you know, we didn't even really have the terms around it yet. And so it was interesting that that was my introduction. I didn't kind of know for a while, for many years, that there was a different way to sell business software until I kind of started to understand where we were coming from to where we were going to.

Tony Zakula (04:45)

Yeah, that was the dawn of the individual users being able to use off-the-shelf products at the freemium or just at the general level. But that was also a strategy of, you introduce people to a better way and you had to build momentum to convince people. We’re kind of building champions within the companies. Hey, look at this cool stuff I'm doing. Look how much time and work I'm saving.

So yeah, it's pretty common nowadays and you know, I think it's something. Now we're going back to, we have to lock some of it down because people install anything and everything or use some cloud service to put data in it right? But back then it was definitely just emerging, the possibility of it.

Margaret (05:35)

It was like the wild, wild west. People were like, yeah, maybe I'll just use this tool. The security teams were probably hair on fire all the time. And I think the other thing that's really interesting is, it seems to me, like during that period of time, there was more of a focus on the usability because that's how you won, right?

If you got your software in with an individual user, they would have to love it to actually be a champion rather than historically. You would sell into a large enterprise top down, the boss would make the decision and just mandate that everyone use that software, right?

Tony Zakula (06:16)

Yeah, software is always sold to executives, which care very little about the user experience. As long as the business ran, as their businesses could function, it was an era of Apple phones becoming dominant, the user experience. People became evangelists for their technology products.

And so I think everyone figured out early on that if you had something amazing, it would, you know, we use the term today–I don't think it was around then, about going viral. People would just love it. They'd evangelize it. They'd show other people. And then as long as you could click a button, install it, start using it without human intervention, which is, you know, the holy grail of SaaS platforms and software. You could go, you could literally scale to millions of users in a very short period of time.

So from an engineering focus, it was very much about studying that user experience, studying that onboarding experience, building software differently. It was a totally different thought process than how software was originally designed and developed. It was about solving business needs, the last 20 years.

Margaret (07:36)

And so it feels like now we're jumping ahead to the now, of Kodaris and what you've been building.

Tony Zakula (07:43)

Three years later, no. I said three years later. I don't want to think how long that's been, but.

Margaret (07:50)

11 years later. Yeah, so it feels like you've brought in a lot of those same, kind of, core tenets to Kodaris. Obviously, maybe not the selling to the individual user and having a free product that kind of wedges in, but the usability and, how many times at Invision did I write articles about surprise and delighting, right?

It seems like that a lot of those themes have carried on and kind of were truly a change in the industry rather than just like a little fad.

Tony Zakula (08:29)

Yeah, I think user experience today is table stakes. You have to have great user experience if you're going to have a scaling software product, right? If you're an ERP, there are certain table stakes, there are certain things. People need that to run their business. If you're not an ERP or some utility software that businesses have to have, the better user experience you have, the more adoption you'll receive.

It's kind of interesting because we also do the commerce side, so the actual customer-facing, which, driving sales and revenue and all that on the commerce side is all about experience. As you think about bringing that back into business software, it's still the same set of human beings, just different people, different personas, right?

And so when you think about that adoption, if you can reduce the amount of clicks, thrill the user with automation, make their job easier. The same principle applies, they'll evangelize you. And we're kind of in that unique space where they'll evangelize you to other departments, right? And then other departments across the company will adopt.

So the same principle to sell software 15 years ago applies, build an amazing experience for users and they will take you to other people in their company, other users in the industry, and they'll work to drive your product. And because we all fall in love with our tech products, it's who we are nowadays.

Margaret (10:06)

I know we have emotional feelings about our business software, which is lovely. I think, a point about the user experience–I know we're talking about, like, in an individual product, the user experience and having a good user experience. But it's also problematic for user experience if somebody at a business needs to use a whole bunch of products, connect them together, get data flowing correctly.

Can you talk a little bit about that? It's not just like the user experience of doing the thing in the software itself, but also kind of all of these systems connected together.

Tony Zakula (10:44)

So when SaaS software first started going to cloud or cloud software first started being developed–and it's interesting, I remember someone at Redpoint, who's a prolific writer Tomaj. Wrote an article about the fragmentation of SaaS right and he was spot-on as usual.

I think the…what happened was we became very specialized in user experiences. And those experiences required very specialized software and focus on very specific pain points. But it was so easy to drive adoption. People were so thrilled after years of some painful user experiences to find things that made their life easier, that it really exploded. And then you had thousands and thousands of startups and all solving problems with cloud software that made our lives easier, which was amazing.

But like everything in business that goes through cycles, and I think what we're seeing now and what the industry is starting to experience is, one, that data is on all those different SaaS providers. I have to keep all those integrated and talking together. I have to share data between all of those.

And I might have 27 software applications my company is using. And in the old days, when we were doing cloud, we talked about data silos and breaking down those data silos because now it's accessible in the cloud. It's everywhere. It's not housed and locked down. And now what you had all these 27 mini silos now with data stuff happening, all this different software, they're not sharing, they're not talking.

And so I think we're starting to see that come back and we're starting to see businesses look for solutions where they can get those 27 solutions on one platform that talks to each other, a couple points of integration, not to silo their data, but to remove the overhead and increase business efficiency because that became very inefficient. Trying to keep all these pieces of software talking to each other, real time updated.

In the old days, you had to silo and everything was all in one spot. So there was no other place. It was very inefficient. And time is money and integration is money. Providers are, you know, not everything is turnkey. And also businesses had very, and they're still moving to the cloud. It's not complete. There's a lot of big business that's still not in the cloud.

But as it matures, I think there's largely an opportunity to trend back to, have a cloud provider. I may have several solutions on that cloud provider that is in one spot. A couple main integrations to my different core pieces of software so I can get real-time data on all of that.

But other than that, as long as I can stay within those walls, have no more integrations, I have less breakdowns, I have less downtime, and it's just overall easier to manage my company from an IT perspective.

Margaret (14:12)

Yeah. And it's interesting. There's this idea of that, platform needs to be open, right? But also you want to almost avoid having lots of things plugged into it to solve that exact challenge, right?

Tony Zakula (14:31)

Yeah, I think, you know, and we're starting to talk about the, one ERP, one customer success platform. There's some big providers out there who, and ERPs are great at being high transactional, running the company, well-defined gap counting practices.

But then there's a customer experience of driving your users’ experience, keeping sales reps out in the field with mobile apps, keeping your customers on your commerce system, all these things happening that traditionally ERPs have not been built for.

So as we think about that customer success system, some large companies and I saw where there's…Home Depot's doing this, there was a CEO article from the CEO of ServiceNow saying adoption of their platform consolidating SaaS applications onto their platform and building them out.

Because that really gives you those things. And then as people want to plug into that, maybe it's your customers, maybe it's third parties, they can do that. But you have a core source of truth that may be two platforms that constantly talk to each other.

And business initiatives come with…a tech build on the customer success platform comes with an understanding of how we integrate everything that's needed to make sure that data is regulated, it's fully integrated with the core, two core systems. So it's open for, so it doesn't become a silo, but any core business functionality or customer functionality, those things happen in that layer.

You know, maybe you're pumping analytical data now to your BI system out of that layer. But it's still all the core data is residing in one place. And nowadays, both of those could be in the cloud together. So it's managed, it's secure, but you don't have 47 pieces of data. And then also with cybersecurity and the world we live in, it becomes a much more hardened concept as well.

Margaret (16:45)

Yeah. Yeah, that was going to be the next thing that I brought up is we're going back to security teams with their hair on fire. I imagine also managing two applications, right? An ERP and a customer success platform is a lot easier in terms of making sure that people, that the software providers are compliant and doing the best data management practices and keeping everything safe, right?

Tony Zakula (17:12)

Yeah, absolutely. And I think nowadays with all the cloud providers like AWS, you have your hardware and all of those things are abstracted then you have your ERPs even probably running on one of the big cloud providers. And if you're in the cloud and then, of course, Kodaris runs on AWS and we use them as our underlying infrastructure provider.

So it's a layered approach, but again, it's very controlled, very integrated when it comes to actually interacting with the users. All of that becomes the custom software, but hopefully, you know, just like we talk about our customers driving us to develop more so they can keep it in that customer success layer and that operational layer, so they don't have to go outside and put their data in other places now.

Which is, you know, I think we're going to see more and more of that as we go on. But it also, you know, provides greater value back to them as a customer. Cause now I have maybe two SaaS fees or I have two providers, three providers that I'm paying the bulk of my SaaS revenue to and services revenue instead of spreading it across so many providers, managing contracts, doing all those different things.

So we're seeing customers can save sometimes up to 60, 70, 80% on their…sometimes they're saving to 300%, reducing other SaaS applications and bringing it onto one layer. And that doesn't even count the integration costs and the maintenance cost and all those other costs that go along with just buying that one piece of software and that SaaS fee with that contract.

Margaret (18:59)

Yeah, because, you know that those sales reps are coming back year after year or whatever your contract length is for each of those individual subscriptions and trying to upsell or, there's a price increase this year or whatever it might be.

Tony Zakula (19:13)

It's not only that, it's also the, you know, people underestimate the IT it takes or the IT hours it takes or the human beings it takes to maintain, monitor, watch, audit, you know, all those different things. And today, you know, we talk about the rise of AI with workplace efficiency and increasing that and reducing hours.

Sometimes it's simple things like we can migrate and put everything onto one platform. And now we've reduced our man hours, same as AWS promised. You migrate to a cloud, you're not managing hardware servers, the network closet. It's starting to be that way with bringing back some of those applications into one layer. You're going to reduce those man hours and services hours from all those different third party providers and internal IT resources.

Margaret (20:13)

Yeah. Yeah, it was interesting. I was talking to a couple of CMOs recently and we were talking about how, you know, a decade ago, if you had a value prop that you could, you know, save a company money or time or whatever it was, do this thing better. And you could prove it. That was enough to kind of make the sale.

And now, over the last couple years, there's been so much pushback of like, know that that would be great for my business. I don't have anybody to implement it and make sure it's going well. And like, I just don't even have the resources to be able to adopt something that I know actually would be good for my company.

Tony Zakula (20:56)

Yeah, I think that's a challenge because no longer can you just be a good SaaS application, right? You're not. And look, I think, you know, there's, if you look at even the top software, come with the top cloud providers, maybe one does some things better than the other, but overall the user experience that we have today is very good, right? So it's not like it goes from a spreadsheet and copying on a scanner your pictures of your receipt to pasting that and submitting that to, I could take a picture of my receipt and boom, it's there.

So the gains in user experience are much more incremental now. And as long as your same stack is close, like it's 90%, it's very hard for a software application to come out and say, we're 400% better in user experience, right? I mean, those days are gone, like everything, the market's matured.

So I think it becomes about business efficiency. It becomes about being, maybe, inventing a new way to do something. But I think we're also starting to see, especially with AI, the consolidated platforms are going to become much more difficult to compete with as long as they keep innovating that user experience and staying up with it.

Because a SaaS application coming out to solve a very specific problem, unless it can drop in as a plugin on a platform, it becomes very difficult to replace the whole platform. And look, we all know ERPs are once every 10, 20 years, because you have to change a business, you have to change everything. I think you'll see that as well in consolidated platforms that companies will rely on them. And as long as providers like us are staying cutting edge or close to cutting edge, giving value back to our customers.

It just becomes easier because it's not about that one little piece of software that might be good for our business. Because my provider might get it eventually, or it's just the cost is way too much to switch. We just can't do it. Or the security.

Margaret (23:11)

Yeah, it's way stickier, right, if you have a full platform than an individual point solution. And I think, too, with the individual point solution, what I've seen is that if a startup could build in six months an individual point solution, and especially with AI, there's somebody that can build it in a weekend, right?

So it's like, you can do it right now with an AI agent and I don't code and I can build stuff. So it does feel like that heyday of 10, 15 years ago of building those specialized products is kind of waning.

Tony Zakula (23:54)

Yeah, I think great engineers solved business problems. And you had a lot of people who were in code and maybe you had developers who didn't understand the business, but you needed somebody to bang out the code. But the great engineers always understood problems, came up with solutions. The thing about now is AI will replace those coders and be better at it, right? I mean, we're seeing that already.

You'll never replace the great engineers or the problem solvers who understand and can describe and say, I need you to build this this way. This is how I need it done. And we see that with AI today. Developers using AI, the very good developers are getting faster. So good news for the consumers is, the people getting software, they're going to get better products faster, more innovation.

Great developers who are problem solvers will, or business analysts will be able to solve problems faster. If all you did was know how to write code and you didn't really understand problems, you're probably getting laid off, right? And if you're one-off SaaS startups, if you could use AI and say, I built this and it's amazing value to my customers, you're absolutely right.

There's a developer sitting somewhere that says, that's cool. I'm going to build that and build it through AI in a weekend, same as the startup did. And I'm just going to put in my product because my cost is so much lower. I can do that. I don't need development budget to do that. That world is starting to take shape over the next five years, though, or three years. It will get faster and faster and faster to where, you know,

There will not be just coders anymore. There will be people who understand problems and can prompt and describe and get the code written for them.

Margaret (25:54)

Yeah. Well, if I thought the world was moving too fast 10 years ago, giddy up, right?

Tony Zakula (26:00)

Yeah. I think as we all become more productive with AI, you know, I think it will, it's not a, it's not a bad thing. It's not a scary thing. I think it will transition the world we live in, but with business, with anything, you know, bringing value to the customer, learning how to do it faster at lower margins. The industry is just going to transition.

There's going to be a transition of industries, the transition of the tech industry for sure, transition of the funding of startups for sure. The problems are not going away. They're transitioning to other areas like how do we make AI smarter? How do we go faster? How do we make it in different places?

Margaret (26:48)

How do we keep our data secure?

Tony Zakula (26:50)

Yeah, exactly. It's just the traditional thing that we've seen the last 15 years is going away.

And I think this dawn of consolidating back is just starting. It's just budding now and we'll see that now over the next five years. You know, we're fortunate. I can't say we saw it coming five years ago and built for it. But having that great customer relationship, solving problems, working with their businesses, we happen to now have this platform of solutions and we continue to build it out with customers.

And so they kind of put us on this part of their pain points of, hey, I need this solution. I see there's a couple SaaS applications out there. Do you have something like this? How long would it take you to build it? Because they desired not to go outside their four walls. And we've been fortunate enough the last six years or seven years to be doing that. And now this new kind of age is appearing and we're well positioned to service customers in that age, for those who want to consolidate.

Margaret (28:01)

Well, we'll republish this and do a reaction in five years and see how correct we were or weren't. Okay, deal.

Tony Zakula (28:04)

Yeah.

Sounds good. We'll check out my predictions.

Margaret (28:11)

Yeah, exactly.

Tony's predictions from 2025. All right. Always a pleasure, Tony.

Tony Zakula (28:14)

Awesome.

Margaret (28:19)

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Margaret (28:28)

Thank you for joining us this week on the Kodaris Community Show.

We'll see you back next time.