The world of cloud based apps for small and medium size businesses is all about good news and bad news for those in the business SaaS market. This according to a presentation this morning here at SaaS Connect in San Francisco by Blissfully Founder and CEO Ariel Diaz called “SaaS Growth Trends in 2018.”

Blissfully has done a study of business SaaS usage, which Diaz said will be compiled into a report to be issued in the coming weeks. Unfortunately we couldn’t pull a lot of data off the slides but will add specifics once we get our hands on a copy of Diaz’s presentation.

Diaz shared some of the study’s general findings, and then gave his take on the implications.

“Bigger companies use more SaaS, but the rate of growth (in SaaS usage) is consistent across company size.”

As companies grow, the mix of SaaS products they use evolves, Diaz said. Early on sales and lead generation tools are emphasized. As businesses grow and mature they spend more on IT tools and later, the spend on marketing related apps grows then levels off.

Freemium products remain popular and not just with budget conscious small businesses. Use of freemium was pretty consistent across business size, according to Blissfully. Overall, freemium usage was 3X usage of paid SaaS applications.

Implications of Current Trends

More business apps means more vendors selling apps, which is making it much harder to differentiate your app from any of a thousand competitors. One possible differentiator is brand, according to Diaz. This suggests that the app with the greatest resources to build a brand (generally an expensive undertaking) is in the best position to win in a category.

On the plus side, Diaz notes SMB SaaS market demand is still growing, and at a healthy clip, and there are still categories that are still underserved (he didn’t elaborate on what these were).

From the perspective of the SaaS consumer (the SMB) more SaaS vendors means more confusion, which makes it hard for them to choose software. The flip side of this equation is that “every business function is served by great software.”

He concluded that businesses “need tools to manage SaaS chaos.” This comment was a bit self-serving since Blissfully’s service offering is to help businesses manage all of the SaaS products they subscribe to, but it also an observation consistent with our data. The Tech Adoption Index’s most recent survey (from December 2017) shows that at least half of all small businesses would “prefer to work with a single company that could address most or all of these areas for a single monthly or annual fee.”