The Transformational Impact of Low-code on the SaaS Industry in 2023
Amidst a global software developer shortage and inflation, low-code is rapidly emerging as a faster way to launch software companies – and it is redefining the industry. According to Gartner, organizations will be developing 70% of their new applications using low-code or no-code by 2025. If this holds true, then low-code development will transform the software industry with much the same force as which cloud computing disrupted datacenters. Small companies will leapfrog big companies. The rate of innovation will explode. History is full of vastly underestimated technologies that unexpectedly transformed industries. Cloud computing was one of those forces. Low-code application development is another.
If you haven’t been following low-code application platforms (LCAP) closely, the term refers to online GUI tools for building software applications with more mouse and less programming. With low-code, it’s often possible to build business systems in days and thousands of dollars that previously required years and millions of dollars. This is an intentional oversimplification, but it sets the stage for contemplation. It begs the question, “What will happen to the SaaS and overall software industries when low-code becomes the norm rather than the exception?”
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The history of computing tells us that those who adapt will prosper, and those who don’t will be left wondering what just happened. Low-code represents a pivotal maturation of the cloud computing industry that democratizes SaaS development on a scale that is reminiscent of GUI’s impact on desktop computing in the 1980s. The impact will be broad and deep – affecting every aspect of the software development industry. This article examines the transformational impact that low-code will have on the SaaS industry in 2023 and over the next few years.
THE RAPID GROWTH OF A LOW-CODE WORKFORCE
If most new software applications will be developed using low-code developers, then we’re going to need a lot more low-code developer. Many of today’s low-code developers are drawing big dollars for their skills, despite the fact that low-code supposedly lowers the skill requirements for developers. It’s simple supply and demand. If we reminisce about the early days of cloud, almost anyone could get a good job if they knew how to click a few buttons in the AWS portal, but eventually the workforce caught up. The same thing will happen with low-code over the next few years as the low-code workforce catches up with the growing demand.
THE AGE OF HYPERSPECIALIZATION
As it becomes easy and affordable to participate in the software industry, the next few years will reach the “long tail” of specialized SaaS applications for every niche imaginable. The impact will be similar to what self-publishing did for the book industry. We can expect a rapid emergence of alternative SaaS applications that leapfrog longstanding competitors. Why would anyone want to pay $25 per user per month for a SaaS application if hundreds of alternatives exist on the market for a fraction of the cost? In the early days of SaaS, customers didn’t have choices, but with the increased prevalence of low-code platforms, we will see more software choices.
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LAUNCH A BILLION DOLLAR BUSINESS FROM RURAL REGIONS
Until recently, the $200+ billion SaaS industry was largely reserved for venture-backed elites. However, with the advent of low-code development and Al tools, and working remotely, the playing field is quickly leveling. The longstanding Silcon Valley startup model is up for grabs by a new era of savvy entrepreneurs who use low-code tools to launch SaaS businesses without needing to spend years raising venture capital money. The market transition enables a wave of new SaaS startups that address specialized SaaS markets and leapfrog competitors with alternative offerings. With low-code, an entrepreneur in West Virginia has all the tools needed to build a SaaS business that competes head-to-head with companies in technology hubs like Austin, Boston, and New York.
MANY SOFTWARE COMPANIES WILL BE CAUGHT OFFGUARD
In the old folk song, John Henry died with a hammer in his hand trying to beat the steam hammer. It’s human nature to resist change. Many software companies will be caught off guard with the change. Many software companies don’t give low-code the attention it deserves because it’s not considered to be “real programming.” In the early 1980s, IBM didn’t give desktop computing the attention it deserved because it wasn’t considered to be serious computing. A common argument against low-code is that it works fine for simple applications, but not for building serious systems. A decade ago, we heard datacenter managers saying the same things about cloud computing. As with datacenters, there will be a ‘changing of the guard’ so to speak. Many legacy software companies will fall by the wayside as new innovators enter their markets at rates never before imaginable.
LOW-CODE WILL TRANSFORM THE SOFTWARE INDUSTRY
When it comes to low-code, it is easy to be distracted by the less important topic of selling tools and overlook the transformational impact upon the world-wide software industry. What’s more important is that low-code will produce a ripple effect of value creation and wealth transfer that affects software companies, developers, cloud providers and customers. Many traditional software developers will be displaced by low-code developers. Traditional SaaS companies will be leapfrogged by easy-to-use alternative offerings with lower costs. New software applications will be written, and legacy software will be rewritten to reduce the need for expensive software teams. The impact on software developers will be similar to the impact that cloud computing had on the jobs of IT professionals. Enterprise customers will also be impacted, as they turn toward low-code to turn around troubled software development projects; or as a way to escape the enterprise software companies that have long held organizations captive.
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