AI Integration in SaaS: A Statistical Analysis
If you lead a SaaS company, you’ll likely be wondering if it’s time to integrate some AI into it.
From sales to accounting and inventory management, regardless of the SaaS product you offer, there are few business functions that cannot be enhanced by strategically integrating AI into their workflows. There are even AI applications that enhance the output of other AI tools, such as Loopcv’s AI Humanizer.
On the one hand, the increasing application of AI in business means there’s an extraordinary opportunity to increase the value offered to your end users.
However, integrating AI into a SaaS product might create significant disruptions to your business. Are the potential benefits worth the costs and potential risks?
The statistics strongly suggest so. In this article, we’ll cover a few major AI SaaS stats every SaaS leader should know.
Is the SaaS Industry Ready for AI?
One Tech Jury study shows that, already, up to 30% of SaaS businesses use AI in some form. And of those who currently don’t, 42% plan to incorporate AI into their products in the near future.
These findings are supported by another study by SaaS Academy, showing that AI will be integrated into nearly every new software product or service by 2025.
A good example of this evolution is in the field of graphic design. In the past, simple tasks like erasing the background of a photo had to be done by a graphic designer with deep Photoshop skills.
These days, tools like Ninja transfers background remover make it possible to achieve the same results within seconds, using AI-enhanced software.
If you’re wondering what the future holds for your SaaS product or business, these stats paint a clear picture. The SaaS industry is not just visibly ready for AI—it is leading the global adoption and application of AI to modern business.
Gavin Yi, Founder and CEO of Yijin Hardware, weighs in, answering the question of how ready the SaaS industry is for AI integration:
“The SaaS market is booming, and AI is a game-changer for small businesses. We’ve seen firsthand how AI-powered SaaS can empower teams to optimize workflows, increase productivity, and compete with much bigger companies with far greater resources.
The stats confirm what we already know: AI isn’t just a trend; it’s the new way to think about productivity, and it’s here to stay.”
In the rest of this article, we’ll explore some more stats to help give you a clear picture of what to expect and how to plan for AI integration in your SaaS product.
Key AI SaaS Market Trends: Size and Growth
According to a report by Acropolium the AI in SaaS market currently stands at a valuation of $71.54 billion. By 2031, this figure is expected to have grown by over 1000% to a staggering $775.44 billion.
These forecasts suggest that the use of AI in the SaaS industry will grow at a Compound Annual Growth Rate (CAGR) of 38.28% from 2024 to 2031. This indicates that while the pace of current AI adoption in the SaaS industry is quite rapid, it is only set to increase over the coming years.
Matthew Channell, Owner of TSW Training, offers some thoughts in explaining these trends.
“Leading global companies have recognized the potential of AI and are meeting this potential with astronomical amounts of investment in research and development,” he says. “This is leading to a near-constant stream of AI and SaaS innovation with the potential to expedite the adoption of AI in SaaS.”
Another business leader, Murtaza Oklu, Owner of OMO Transfer, shares a similar perspective: The growth of cloud-based SaaS solutions is closely linked to the development of AI and other technologies like machine learning.
There are numerous reasons why this is true, but the biggest one, arguably, is the ability of cloud-based infrastructure to provide the scalability and flexibility needed to support AI and machine learning processes.”
Simply put, when these technologies are combined, the result is unprecedented access to processing power, even for the smallest of businesses. If you’d like to learn more, here’s a helpful guide to the impact of machine learning on SaaS.
As with any market, there are various niches within the AI SaaS industry, and they tend to behave somewhat differently.
As you might expect, large SaaS businesses currently account for the lion’s share of AI investment, with 58.04% of the market in 2021, valued at USD 54.23 billion, with a CAGR of 38.28%.
Small and medium-scale SaaS businesses are not far behind, however, with their AI investment valued at a total of $39.20 billion in 2021.
By region, North America is the largest market, with a holding of 39.96% of the market in 2021 and a projected CAGR of 36.89%. The USA accounts for much of the North American dominance, as it is the single largest SaaS market, with US SaaS companies raking in a combined $235 billion in revenue in 2023.
Somewhat surprisingly, the Asia Pacific region—not Europe—is the next largest regional segment, with a valuation of $27.79 billion in 2021. The Asia Pacific region also has the highest projected CAGR, at 41.22%.
Key Alternative AI SaaS Markets
The US is the clear market leader in the SaaS industry, and it also leads the way for AI integration in SaaS. However, other markets may offer profitable opportunities too.
India recorded a SaaS revenue of $2.15 billion in 2023. It also hosts tens of thousands of SaaS companies that will likely be key drivers of global AI SaaS integration in the coming years.
China’s SaaS industry is the largest in the Asia Pacific region, with over €15.92 billion in size. While this is easily dwarfed by larger markets like the US and UK, it still presents an attractive opportunity for the right players.
Australia is the third Asia-Pacific giant to pay close attention to. Australia is home to a well-developed tech ecosystem with SaaS giants like Atlassian and Canva, to name a few. In 2023, its total SaaS revenue was projected to be $4.43 billion.
The European region as a whole is one of the leading global destinations for SaaS investment, with a 2023 revenue estimate of $61.04 billion. Within the European Economic Area, France, Spain, and Italy stand out as leading SaaS markets.
Getting Your Business Ready to Adopt AI
Alistair Flett, Managing Director at Pronto Hire, shares, “Within a few years, the integration of AI and SaaS will be the norm in most industries. So while the SaaS companies integrating AI may be considered pioneers today, in the near future, the use of AI in SaaS will likely be considered standard practice.”
Is your business ready to leap? Adopting AI into your SaaS business or product offers clear benefits. However, you may need a structured approach to implementing this change. Here are the steps we’d recommend:
Define Objectives and Identify Use Cases
To successfully integrate AI into a SaaS tool, thinking strategically is important. Primarily, this means having a clear picture of how AI can enhance the value of your SaaS product, and directing your resources into this in a focused manner.
Rodger Desai, CEO of Prove, offers the following advice: “AI can be used in SaaS businesses in different ways, but you won’t likely be able to implement them all at once. To get the best results, it’s best to think strategically by focusing on specific use cases that add the most value for the end user.”
For example, understanding data manipulation and retrieval through AI can benefit significantly from foundational techniques like web scraping with Python.
In identifying relevant use cases for AI integrations, SaaS leaders must also consider some of the ethical concerns around AI use. For instance, numerous HR and recruitment SaaS tools now rely on AI to automate several processes. The use of AI in this way requires the application of an intentional policy on ethical use and transparency.
Assess Feasibility and Gather Data
If the scope of expansion or integration is too large, you may be better off approaching it slowly. Sometimes, the conditions are simply not ideal for making any major changes.
For example, if you’ve only recently gone to market with a new SaaS product, introducing any significant change, such as an AI integration, may be confusing for your users and counterproductive. An honest, data-based assessment of the feasibility of executing an AI integration is needed for the best results.
Develop and Test Prototypes
Once you have identified the specific use cases and features to focus on and are certain the project is feasible, it’s time to execute.
Upskill Your Team
You’ll likely need to hire new team members to work through an AI into SaaS integration effectively. AI is a highly specialized field, and your existing developers may not be experts in it.
You may also need to invest in training and upskilling programs or other workplace learning opportunities for some of your existing team members to set the stage for seamless workflows between AI experts and non-AI experts on your team.
Educate Users About AI Features
Finally, you will need to educate your users about the upcoming changes. Adding any major new features is typically disruptive for end users, but you can offer education to help smoothen the learning curve. These could be online video tutorials, blog and knowledgebase articles, and even in-person workshops for your larger accounts.
Getting Started
The potential of AI to completely revolutionize the SaaS industry is clear, and the market is already recognizing this.
To successfully hop onto the trend, apply the tips we’ve shared in this article. And if you enjoyed reading this article, we recommend exploring our guide Revolutionizing Corporate Restructuring with AI.