Mark Andreessen famously said,
“Software is eating the world.”
And he was right…
It’s nearly impossible to imagine a business that couldn’t grow faster or become more profitable by leveraging software. No matter what business you’re in, be it manufacturing, retail, banking and finance, transportation, etc., the day-to-day operations of all these businesses are enabled and scaled through digital technology.
This means that, on some level, every business is in the technology business. And very soon, every company will also need to become an AI company.
The global software market continues to grow rapidly, driven by the increasing digitalization of businesses across all sectors. In 2024, the market was valued at approximately USD 722.43 billion. By 2034, it is projected to surge to USD 2.2 trillion (with a “T”), exhibiting a compound annual growth rate (CAGR) of 11.9%. This trajectory underscores the key role software plays in modern business operations and the substantial financial commitment it demands.
But technology doesn’t exist for its own sake. These investments are a means to achieve key business outcomes: increasing top-line sales, retaining existing customers, and maintaining or reducing operational costs, all of which drive profitability.
Technology investments require stewardship, and companies are adopting the same mindset and operational processes that software product companies have been using for decades: a product management approach.
The product management approach involves the following transformations:
Whether for commercial software products or in-house applications, modern product management is oriented around design thinking, experimentation, and measurable business impact.
Product operations partners with product managers, engineers, and designers to develop experiments, measurement strategies, and digital enablement approaches that can scale.
Product development lifecycle:
In a world where technology drives the day-to-day activity in most businesses, we believe that every company must adopt the same culture, disciplines, behaviors, and tools that the best software companies use to develop products.
Whether an organization is developing commercial SaaS/cloud applications or deploying applications for its own internal use, the product management approach ensures that these investments yield tangible ROI and intended outcomes.
In-house Enterprise Software
Research suggests that companies spend between $1,000 and $3,500 per employee annually on SaaS applications (about 1/3 of total tech spending). While this spending varies depending on company size and industry, it underscores the significant investment that large enterprises are making in software to drive automation and efficiency.
This level of spending also highlights the importance of effective adoption, management, and optimization of this software to maximize ROI and ensure that these investments align with business goals and objectives.
Alec Dewell, Senior Product Manager – Oliver James
Commercial Software Companies
One of the key advantages that multi-tenant SaaS holds over legacy, on-premise software is that it gives the software vendor the opportunity to know what their users are doing in and with the product. Armed with these insights, customer success (CS) professionals at these SaaS companies can proactively intervene to ensure that customers are getting the value they envisioned when they decided to buy these solutions.
And yet, 90% of SaaS companies have a disconnect. Outside the top decile of these companies, SaaS businesses lack basic visibility into feature and process adoption among their customers. And among those few that have it, fewer still utilize the information to conduct proactive CS outreach, missing a critical opportunity to drive adoption, retention, or growth from their customers.
A recent post by Todd Gardner, a veteran of SaaS finance, valuation, pricing, and metrics, says it well: “Usage is the most important thing in SaaS – full stop.”
Gardner goes on to point out the following:
“If customers use your product frequently, your SaaS business will succeed. Frequent usage drives retention, expansion, NPS scores, and referrals, all contributing to a stable and growing revenue base. With a stable revenue stream, a SaaS business will not fail…
It is a lot of work to identify, capture, clean, tag, store, distribute, report, and analyze the various usage data. But this is the absolute core of your business. No data is more foundational to your success than customer usage data.”
Given the massive upfront investments that commercial software businesses make into R&D and go-to-market, it is incumbent upon these companies to deliver positive ROI on these expenditures by thoughtfully planning, analyzing, and driving user adoption of the software they create.
