An Industry on the Rise: Key Players in the ALM/QMS SaaS Market
Product development processes differ greatly between industries. If GME wants to put a new video game on the market, there are very few regulatory or quality-control obstacles or whistleblowers that will prevent a product launch. Its a different story when we’re talking about say Pfizer released a new vaccine or Boeing releasing a new airplane model. Industries like pharma and aerospace are heavily supervised for quality control, regulatory compliance, and transparency throughout the R&D process. In contrast to GME, for some industries product development is truly a matter of life and death. And in recent years, a number of innovative players are engineering SaaS solutions to the bottlenecks and inherent inefficiencies in the product development processes of heavily regulated industries.
But what exactly is ALM? Application lifecycle management (ALM) is an integrated system of people, tools and processes that supervise a software application from its initial planning and development, through testing and maintenance, and into decommissioning and retirement. By combining and organizing the elements of an application’s lifecycle, ALM improves product quality, optimizes productivity and eases the management and maintenance burden for related products and services.
Relatedly, a quality management system (QMS) is the core of any quality and compliance process. It is a regulatory requirement that the Food and Drug Administration (FDA) and other global regulatory bodies consider critical. An automated QMS system reduces audit time and findings and lowers the risk of product recalls.
Luckily for investors, both the global ALM and QMS markets are forecast for robust growth in coming years. From a macro perspective, the application life cycle (ALM) industry is growing at a steady CAGR of 7.0%. With expected growths in overall technology to also continue, this CAGR could accelerate and create a $4.5b global market by 2024. To highlight this point further, with sizable market share available to lesser known companies and weak barriers to entry, the ALM has a competitive landscape for businesses looking to make headway.
Similarly, the global quality management software (QMS) market was valued at $8.25b in 2020 and is expected to expand at a CAGR of 9.7% from 2021 to 2028. The growing importance of customer-centric production and frequent changes in regulations and standards that demand recurring compliances are driving the growth of the market. Registration to ISO 90001, ISO 14001, and other international standards has become imperative for organizations to run businesses worldwide as it enables them to meet market demands, competitive pricing, legislative requirements, and satisfy customer needs.
Therefore, I think there are some companies that have been implementing unique techniques and niches that could capture a sizable share. In particular, companies like Orcanos are using their unique niche of managing complex workflows of large enterprises as they transition from paper-based systems to electronic based operations. Orcano’s real proposition comes into play for heavily-regulated industries like pharma, aerospace, and med tech where product development is often a long, expensive, and inefficient process. Orcano’s module integrates quality control, R&D, and regulatory compliance under a single framework, allowing for an adaptive approach to product development that can save millions of dollars and years in the pipeline. With customers like GE Healthcare, Argo Medical, Zimmer, etc. Orcanos has positioned itself well within the ALM industry. Orcanos is currently in the process of completing a public listing on the TSXV exchange, and will present SaaS watchers and investors with a prime investment opportunity.
Other companies that are using their competitive advantage in the ALM space are Atlassian’s Jira Platform, Jama, Rally Software and Swift ALM. With their large customer base and strong R&D teams, these companies have been able to constantly create strong revenue streams through maintenance applications and large customer subscriptions. For example, Atlassian creates over $500 million USD in revenue on their subscription and maintenance option alone. Its flagship Jira Software platform is part of a family of products designed to help teams of all types manage work. Originally, Jira was designed as a bug and issue tracker. But today, Jira has evolved into a powerful work management tool for all kinds of use cases, from requirements and test case management to agile software development. However, the operational downside with one of these companies is they are industry agnostic. With a company like Orcanos which specializes in medical technology and care, the overall ALM cycle can happen at a predominately more efficient pace.
In conclusion, the Application Lifecycle Management industry has an extremely prosperous road ahead. With a market size of $4.5 billion USD and technological implementation in everyday services, there is an unbelievable opportunity for many of these management companies. Coupled with 95% of organizations becoming cloud based within the next 5 years, there should be a strong takeoff soon for many of these companies.