In today’s fast-paced digital world, businesses of all shapes and sizes are under pressure to innovate, streamline and adapt quickly to new challenges. Software plays a crucial role in this transformation. But not every organization has the time, resources or infrastructure to develop and maintain its own bespoke solutions.
Enter Software as a Service, or SaaS, a game-changing model that democratizes access to powerful tools by delivering them online. Fortunately, how it works is simple. SaaS is essentially hosted software—platforms and tools you likely use every day, like Microsoft Office or Zoom, provided through the cloud. Solutions are designed for broad use, with the flexibility to add custom features if needed. Businesses pay a subscription or license fee to access these tools, making SaaS scalable, efficient and cost-effective.
What’s more, the market is growing fast. SaaS is already indispensable to modern business, and by 2028 SaaS market size is predicted to reach $717 billion globally. At the same time, SaaS businesses are facing a changing risk landscape. That’s where insurance comes in.
SaaS: Everywhere, for everyone
The concept of SaaS isn’t new, but its evolution has been remarkable. First emerging in the late 1990s, SaaS was initially a response to the cumbersome process of purchasing and installing software on physical hardware. Early pioneers like Salesforce paved the way, before SaaS exploded across industries, supporting everything from cyber security to accounting and project management.
Here are key types to be aware of:
- Customer relationship management (CRM): Tools like Salesforce CRM help businesses manage customer data and interactions, to ultimately improve relationships and boost sales.
- Enterprise resource planning (ERP): Platforms like Oracle ERP help streamline core processes and improve efficiency across departments.
- Project management: SaaS tools like Monday.com and Trello allow teams to manage projects, collaborate and work productively.
- Communication: Think Slack or Zoom. These tools enable teams to communicate and collaborate efficiently.
- Content management and file sharing: Content management systems let users create and manage content on websites, while Dropbox and SharePoint are lifelines for file sharing.
- Security: SaaS providers like Norton Antivirus and CrowdStrike play an important role in cyber security, keeping businesses ahead of cyber threats.
While there is some overlap in the risks posed by SaaS platforms, each introduces distinct challenges. For example, CRMs often store vast amounts of sensitive customer data, making them particularly vulnerable to data breaches and compliance risks. In contrast, ERP software is vital to any company’s day-to-day trading, whether that be accounting functions or supply chain operations. As such, the greater vulnerability lies in potential system outages and downtime. While the task of creating bespoke modifications increases the risk of not meeting deadlines or specific client demands. These disruptions can delay key deliverables and hamper productivity, which can result in a breach of contract terms.
The insurance opportunity
SaaS isn’t a niche, high-tech corner of the market. It’s the backbone of modern business, with more than 80% of companies using SaaS to perform day-to-day trading. In light of this ever-increasing demand, there’s never been a better time to enter this market.
The insurance sector is in prime position to help SaaS companies navigate their risk landscape, through good risk management protocols and robust policy wordings. At CFC, we’re already safeguarding businesses in this space, adapting our technology wording to provide the protection that’s required to cover the exposures facing this industry.
Get everything you need to know about SaaS, the exposures and how a comprehensive tech E&O policy should respond in our Broker essentials: SaaS webinar.
