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According to a recent McKinsey Report, 87% of companies say they have skills gaps or will likely have one in the next few years. The skills gap is one of many challenges SaaS organizations face: rapidly changing technologies, regulatory questions, and the current economic climate combine to create a challenging industry environment.

Businesses that can adapt to this uncertainty, embrace new technologies, and build versatile IT teams able to apply new technologies such as AI and automation in productive ways may emerge as new industry leaders. Here, I’ll explore some risks, challenges, and issues relevant to SaaS companies today.

What Are the Current Challenges?

From talent shortages to security and regulatory issues, SaaS leaders are facing numerous challenges:

1. Cybersecurity Threats and Solutions

Cybersecurity is a significant issue for SaaS organizations. Threat actors are using increasingly sophisticated attacks, and new attack vectors, such as malicious prompts being fed to AI, make security more challenging than ever.

SaaS organizations are responsible not only for the security of their data but also for the data of all those using their platform. Security teams must develop new security models that consider the technical and human issues of cybersecurity threats.

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2. Integrating Artificial Intelligence and Machine Learning

Artificial Intelligence and Machine Learning tools have a lot of potential if used correctly. They can automate repetitive tasks and be used for predictive maintenance, analytics, and even security-related work. However, these new tools must be used carefully.

AI models are only as good as the data they’re trained on, and they can make mistakes. An effective and efficient AI model could make an IT team more productive and save a company money. Over-reliance on a flawed model could cause more problems than it solves.

Real-world Example

Real-world Example

Newspaper chain Gannett attempted to use AI to write sports updates but was forced to pause use of the tool after a public backlash when the software published articles with apparent errors.

Errors in high school sports news articles are relatively harmless compared to the potential risk of using AI for data security or in a public-facing decision-making setting.

3. Economic Pressures and Uncertainty

The recent and ongoing economic downturn has had a significant impact on SaaS companies. Many SaaS providers are finding it difficult to win new clients or even retain old ones as the businesses they work with are under increasing financial pressure. Businesses are thinking about every purchase more carefully, and approval processes are becoming lengthy.

As businesses find their budgets increasingly stretched, they're looking for ways to save money. Downgrading or canceling subscriptions they deem unnecessary is one way of achieving this. SaaS organizations must find ways to differentiate themselves from the competition and offer functionality that users find indispensable.

4. Modernizing IT Infrastructure at Speed

The era of “move fast and break things” is gone. Today, consumers are becoming increasingly concerned about privacy, data protection, ethics, and sustainability – and technology companies must reflect those values while continuing to innovate.

Any investments in IT infrastructure must be planned carefully to ensure they’re essential, do not introduce new vulnerabilities, and provide meaningful benefits to the organization.

If your organization is struggling to scale because of technical debt or outdated architecture, you may be faced with some pressure to modernize, for example, by migrating to the cloud.

5. Navigating Regulatory Requirements and Digital Transformation

In many countries, tech companies are faced with a challenging situation where governments are simultaneously encouraging digital transformation initiatives while also introducing new regulations. For example, the UK’s Online Safety Bill raises many questions for companies that provide online services to UK users.

Over the next few years, we’ll likely see even more regulatory changes. More than 25 countries took part in the AI Safety Summit. They signed the Bletchley Declaration in November 2023, planning to meet again in 2024 and continue their investigation into the safety risks of AI, as well as how to write policies to ensure the safe and ethical use of emerging technologies.

IT leaders must stay up to date on regulatory requirements so they’re not caught by surprise by new legislation that might disrupt their business.

6. Bridging the Skills Gap and Retaining Talent

The IT skills gap has been talked about for a long time, but it’s becoming increasingly pronounced as the pace of technical development accelerates. It will take long-term effort from local and national governments to promote IT skills in the workforce.

On an individual company level, it makes sense to focus on retaining staff who are already skilled and offering opportunities for motivated employees to upskill or reskill themselves in new technologies. Investing in training and certification for employees who are already familiar with your organization’s development tools and pipelines is likely to be less expensive than hiring and onboarding new employees.

Retaining staff means providing them with progression opportunities, education, suitable compensation, and flexible working environments. Many managers still promote return-to-office policies, but remote and hybrid working environments are popular among employees.

If your organization is demanding skilled staff commute to the office to conduct work that could be done over a VPN or SSH session, you could be at risk of losing talent to more flexible organizations that offer good work/life balance.

Role of Leadership in Addressing IT Challenges 

As a SaaS leader, it’s your responsibility to guide your IT department and prepare for the challenges you’re currently facing, as well as any new hurdles that might emerge over the coming year.

There are endless IT resources available for free, but effective leaders understand the following is essential:

  • The big picture/how their teams operate on the ground. They communicate with their employees to achieve buy-in for major organizational challenges.
  • Fostering a culture of communication and innovation, where employees are not scared to ask questions, is vital. Modern development approaches such as Agile and DevOps are centered around being willing and able to fail regularly in a low-risk way.
  • Consumer attitudes and even regulations evolve as quickly as technology. Regular, open, and honest communication and a willingness to embrace change are essential for the success of any organization.

Measuring the Success of IT Investments

Once you’ve implemented new IT initiatives, you must measure their performance. Many metrics can be used for this purpose.

  • Uptime, server response times, and concurrent user counts can help measure the performance of cloud services.
  • If you’ve transitioned to a DevOps methodology, you might measure its performance by looking at the number of deployments, frequency of new releases, and the time it takes to release new features, as well as the time to recover from failures.

Consider which metrics you plan on using before introducing any changes to your IT infrastructure and workflows. Measure those metrics before and after your new implementations so you have an accurate picture of whether your IT strategy is effective.

As we head into 2024, artificial intelligence, machine learning, and automation are the big topics on most people’s minds. These technologies have already proven disruptive, and we’re only just seeing what they’re capable of.

As the technologies mature, SaaS leaders don’t just need to consider how to integrate them into their workflows; they’ll also need to keep an eye on emerging regulations and consider whether these new technologies are potential vectors for cyber attacks.

Author's Tip

Author's Tip

It’s more important than ever to invest in upskilling your team and retaining talent. Maintaining an awareness of current trends, security threats, and regulatory challenges can help you plan for the future and arm your company with the tools it needs to succeed in a new technological era.

Turn Challenges Into Opportunities

As a CTO, your responsibility is to lead your teams to success in the face of multiple challenges. From cyber-attacks and data breaches causing disruptions to supply chain and budget issues hindering your initiatives, you need to be ready for anything.

Luckily, IT professionals are an adaptable bunch. Luckier still, you’ve got the CTO Club’s expert insights to help enhance your abilities. As we head into a new year, let's turn challenges into opportunities for growth (and maybe even upskilling). Subscribe to our newsletter for more 2024 CTO trends.

Katie Sanders
By Katie Sanders

As a data-driven content strategist, editor, writer, and community steward, Katie helps technical leaders win at work. Her 14 years of experience in the tech space makes her well-rounded to provide technical audiences with expert insights and practical advice through Q&As, Thought Leadership, Ebooks, etc.