What Lies Ahead For Vertical SAAS In The Face of No-Code & ChatGPT?

Vertical software-as-a-service startups and companies have had a remarkable run over the past decade, with a focus on niches, and sub-niches that have long been underserved. 

If you run a private therapy practice, you can either work with a service such as Calendly to handle and manage your appointments, or a dedicated practice management solution such as SimplePractice, or TheraNest.

Startups such as Veeva, GlamPlus, and Toast have risen to multi-million, and even billion dollar valuations in recent years, all the while focusing on a sub-niche, of a sub-niche, with a limited set of customers, and few dollars to go around.

Vertical SaaS has been so successful in fact, that horizontal giants, the likes of Salesforce, Microsoft, and Google have started offering tailored, niche-specific solutions. 

With a limitless number of niches to target, and billions in venture dollars targeted at them, there is seemingly no spotting for vertical SAAS, however, with the rise of low-code / no-code solutions, and ChatGPT, this segment is set for a reckoning.

Software For Everyone

The core appeal of vertical SAAS solutions was the customizability and flexibility they offered to small niche businesses, most of which couldn't have otherwise afforded to have software developed or customized to suit their internal systems and processes.

Small businesses have long been crafting their systems, processes, and entire operations around the various enterprise software solutions available, instead of the other way around. This, however, is all set to change going forward.

With the rise of no-code / low-code solutions, and their eventual pairing with ChatGPT-like AI solutions, just about anyone will be able to build software, and in any way they like, not just trained professionals who've spent years studying computer science and learning to code.

Today, if a small business wants a new functionality for its clients, or backend processes, it has to either hunt for a solution that provides the same, or have one built from scratch, which is often prohibitively expensive. 

In the future, all they have to do is describe the feature to ChatGPT, to the best of their ability, and in linking with a no/low code solution, they can have such a solution up and running in no-time.

Intensifying Competition

So, what does all of this mean for the burgeoning vertical SAAS segment? Despite the monumental advances in AI and no-code technology, niche SAAS startups aren't going anywhere, and if anything this segment will likely witness increased activity in the years ahead.

With software development becoming increasingly within reach, individuals themselves will start to build tools, plugins and components to serve small business needs. This means intense competition for existing players, ultimately resulting in a race to the bottom when it comes to pricing.

This, however, stands to add substantial value to the broad economy, with any business, or organization, no matter how big or small, capable of digitizing its operations. 

For example, social workers spend a great deal of time on paperwork, and documentation due to the non-availability of a dedicated software solution, with a significant chunk of budget getting eroded in administrative expenses, but in the near future, just about any volunteer can quickly churn out a social work case management software to seamlessly automate processes.

Open Source, Decentralization & Interoperability

This trend will ultimately give rise to open source becoming the norm, with even large enterprise IT solutions opting for an open source model, generating revenues by selling professional services. Along with the source code, even AI prompts, and datasets will be open sourced for anyone to use.

Another key trend is decentralization and interoperability, which basically means that SAAS startups can no longer hold customer data hostage as a means of building competitive moats. Data generated by businesses will be owned by the said business, and will be interoperable with other platforms, tools, and solutions without any major hassles.

Final Words 

This new decade will bring with it substantial changes and upheavals, but in the end it will only deliver substantial value to the broader economy, by getting rid of inefficiencies, and streamlining systems and processes.