Zoe Chew

March 30, 2022

Unbundling of Excel and the Future of SaaS

⭐️ Premium Post

Issue #06

Excel is SaaS’s biggest competitor

In a pre-SaaS (software-as-a-service) world, nearly every industry relied on Microsoft Excel. Accountants relied on it for finance management. Managers used it for project management. HR used it for payrolls and employee directories. The sales team used it for lead management and CRM. Individuals used it for to-do list planning.

As companies adopt digitization, operations and workflows become more complicated. Businesses need to find a way to automate and scale efficiently. Teams need to collaborate internally and externally. Specific use cases gave rise to the unbundling of Excel—businesses are created to replace spreadsheets with alternative tools that cater to a niche target audience, interest, and job-to-be-done.

Turning Excel templates into software companies

Despite new players arise, Excel has yet to be completely replaced due to its decade-long usage, programming capabilities (i.e. Excel formula), and reliability.

In fact, most SaaS apps are simply products unbundled from Excel. These are businesses that turn spreadsheets into profitable software companies:

Unbundling of Excel: Era 1.0, 2.0 and 3.0

To understand the future of SaaS, we need to zoom into the transition of Excel unbundling. I call it Excel 1.0, 2.0, and 3.0 of Excel unbundling:

  • Unbundling of Excel 1.0: The Internet was born. Rise of cloud-based apps such as cloud-based CRM (Salesforce, Hubspot), document management (Dropbox, Google Drive, Microsoft Online), and cloud accounting (Xero). Softwares are created to replace spreadsheet functionalities with a better interface, user experience, integration, and workflow optimization.
  • Unbundling of Excel 2.0: Rise of collaboration tools. Softwares are created to empower team collaboration. For example, project management (Trello, Asana, Jira, ClickUp, Monday), document collaboration (Office 365, Google Docs, Notion), communication tools (Slack, G Suite, Microsoft Teams).
  • Unbundling of Excel 3.0: Rise of no-code, low-code tools. Softwares are created to turn spreadsheets into apps without any technical knowledge. Airtable & Coda turns spreadsheets into interactive databases. Glide, Adalo, AppSheet turns spreadsheets into mobile apps. Sheet2Site and Sheety turn spreadsheets into websites. Softr and Pory turns Airtable database into web apps.

What problems do they solve?

  • Break down technical barriers. No-code and low-code tools empower non-technical developers to build websites, apps, automated workflow, and infrastructure.
  • Reduce blockers. Most team collaboration apps solve this problem by allowing internal collaboration within an organization.
  • Save time, save costs. Engineers can also leverage no/low-code platforms for faster prototyping, testing, backend development, and app deployment. What used to take months are now being built in days. For example, Firebase, Supabase, AWS Amplify, Back4app, Parse.
  • Break down communication silo. Most apps that position themselves to be "everything in one place” are solving this problem. They unify information across departments, unify workflow, and unify company resources under “a single source of truth”.
  • Replace manual process with automation. SaaS that allows integration with multiple apps, build workflows and automatic reporting are solving this specific problem. For example Zapier, IFTTT, Integromat, and Parabola.

Business models

A SaaS typically makes money through a monthly or yearly recurring subscription membership model by providing access to the product features. There are different ways to charge access for users, for example:

  • Single-feature pricing: Charging with a Free plan and an additional Premium plan (monthly or annually) to access products with a single feature set. Common in micro-SaaS, Mac OS apps, and indie developer apps, i.e. Bear, Any.do, CleanShot, Alfred
  • Usage-based pricing: Charging for additional tasks, workflows, and API calls. Common in automation tools, i.e. Zapier, Parabola, Integromat, Paragon.
  • Per-user pricing: Each team member costs an additional “per person, per month” user count pricing. Common in enterprise SaaS, i.e. Slack, Zendesk, Microsoft Teams, Atlassian
  • Transaction fees: Charging recurring subscription fees to access software features plus an additional transaction %. Common in payment integration tools, i.e. Memberstack, Gumroad, Memberful, Stripe, PayPal
  • Add-on pricing: Charging a premium plan with additional features, i.e. custom branding, logo removal, custom URLs, additional customer support, cloud storage, hosting, backup, integration, etc.

Why now?

There are massive opportunities to build in the SaaS space. This section explores the key takeaways, the future of SaaS and the “why now” questions (most important slide in a pitch deck!) for your investors:

  • To compete in today’s SaaS world, it’s not enough to create a SaaS business by offering better UI and UX. Customers have rising expectations—does it offer automation? Integration? Speed? API? All-in-one feature for the price of one?
  • The future of SaaS will be created to adopt the rise of remote work. There could be businesses solving company-wide collaboration, enabling the cross-functional teams to work together rather than same-department collaboration.
  • Rise of the freelancer/knowledge economy means people with different expertise will work together. More solutions are needed to help break the communication silos and uniting information that can be shared across the organization.
  • There are more non-traditional developers than before. Companies are actively looking for people who can build no-code apps without relying on the technical team. More solutions are needed to break down technical barriers, and help non-tech dev to work smoothly with technical engineers.
  • Unbundling of Excel will also lead to re-bundling of SaaS. Just give us one tool that covers the majority of SaaS use cases.

Business opportunities

  • Convert spreadsheets into automatic data viz for reporting. The finance team needs to interact with the sales team for sales-related data; the marketing team needs to correspond with the business development team for customer pipeline data. Typically, teams share their files in one Google Drive and manually find the documents they need. There could be a solution that automatically generates interactive charts, graphs, diagrams, based on the spreadsheet data you upload. Teams can pre-map keyword commands, search by typing in keywords, and the data will be visualized instantly without manually building it. No more multiple dashboards or data viz software is needed.
  • Clubhouse + Otter.ai for customer support. Customer service teams have the customer insights but don’t communicate enough with the engineering team. Engineers can’t directly learn about customer's pain points and build the wrong features. Solution: An audio-based chat app for customer support that allows customers to “voice chat” in real-time. These voice conversations will be automatically transcribed, then generate text-based notes for internal teams. Cross-functional teams can easily bookmark, share, comment, highlight and review customer feedback notes collaboratively.
  • Collaborative no-code APIs. Cross-functional teams can integrate apps to access data, create custom API endpoints, and programmatically “call” these endpoints to retrieve information. For example, you can create an endpoint for e-commerce sales data (i.e. integrate with Shopify store), and other teams can re-use the same endpoint (in an easy-to-use interface) to see the information they need without accessing the sales team dashboard.