If adopted efficiently, software as a service (SaaS) is a profitable business model that can help you grow your company, attract new customers, and upsell your services to existing customers, increasing their lifetime value. In this article, we shed light on how to ensure this efficiency when switching to a SaaS model and discuss the benefits and challenges of SaaS application development. To help you avoid common pitfalls and give you some advice on a winning go-to-market strategy, we share experiences of the Yalantis company, which has a proven track record and expert knowledge in SaaS software development.
Current SaaS market overview and importance of preliminary market research
Referring to Gartner, total end-user spending on SaaS is expected to reach $195,2 million in 2023 as compared to 146,3 million in 2021, an impressive 1.3 times increase over only two years. SaaS is also the most popular among other cloud services such as platform as a service (PaaS) and infrastructure as a service (IaaS). These facts can mean that winning the SaaS market will be getting harder because of increasing competitiveness.
Before beginning with a SaaS development process, it’s important to conduct preliminary research that’ll show whether your product is unique and can bring value to your customers. Analyze your industry and the types of services your competitors offer so that your solution could fill a certain niche or gap in people’s lives. If your industry is only evolving as, for instance, electric vehicle (EV) charging, then entering the market with a unique SaaS solution can become a forward-looking move that can help you win lots of loyal customers.
There are also industries that are slow in SaaS development such as manufacturing. That’s why companies that provide digital manufacturing solutions gain quick recognition like Guidewheel startup, which recently closed a $9 million Series A round. This SaaS solution allows factory managers to monitor any type of equipment from the cloud, helping them quickly analyze equipment conditions to avoid costly downtime as well as save on energy consumption.
SaaS is a promising business direction that is definitely worth exploring. But let’s learn what differentiates SaaS-based applications from the typical on-premises web or mobile applications.
Key characteristics of the SaaS application
Some of the most common SaaS differentiating features include:
Cloud deployment. Unlike traditional web applications deployed on-premises, SaaS solutions require only deployment in the cloud environment. It’s necessary to ensure simultaneous access to the system for as many people as possible.
Subscription-based or pay-as-you-go billing. Using a SaaS solution usually means paying for the services. It can be a monthly or annual subscription or pay-as-you-go pricing for those systems that don’t require lengthy setup and can be used only temporarily in a day. However, to encourage people to pay for your services willingly, those services should promise them real value and better have lots of advantages when compared to similar free solutions. Thus, when developing a SaaS solution it’s critical to think through a captivating value proposition.
Regular updates ensure instant compatibility for all users. Thanks to cloud deployment, SaaS solutions can be regularly updated, ensuring that all users have the most relevant version of the application.
These and many other factors can help you reap lots of benefits from developing a SaaS application. Let’s learn more about these benefits.
How you can benefit from the SaaS model
In this section, we’ve compiled for you a set of persuasive SaaS benefits to dispel any doubts you may have about developing this software solution.
Quick time to market. When releasing a SaaS application, you don’t have to spend much time on establishing a costly on-site infrastructure, a cloud vendor has it covered for you. Thus, you can focus on elaborating on features instead and polishing your marketing strategy to launch the application as quickly as possible.
Fewer resources are needed. For SaaS product development you won’t need as many people and resources as you would need for the traditional on-premises software solution. Plus, you can develop a SaaS product completely with an outsourcing partner as this type of software won’t require constant maintenance from the internal in-house tech team, unlike traditional software.
Cost-efficiency. Naturally, due to deployment in the cloud and fewer resources necessary for the development of the SaaS solution, such products have great cost-saving potential during development so in the long-term perspective. And most importantly SaaS solutions can with time become profitable and cover your initial investment in the development.
High customer attraction and retention potential. SaaS products usually also boast a high level of convenience for the users. Thus, when launching a new SaaS product with advanced features that can significantly simplify or improve your customers’ lives, you increase your competitive advantage and can attract more clients as well as increase the loyalty of your existing customers.
Low cost of ownership. If we compare the SaaS solution to traditional on-premises software, the total cost of ownership will be much lower for SaaS, as it won’t require any additional expenses on infrastructure maintenance.
Despite many benefits, developing a SaaS solution can also pose certain challenges. Let’s discuss some of them in the next section.
Common challenges when developing a SaaS application
Before embarking on the SaaS application development journey, you should take into account the following possible challenges.
Payment data security. SaaS solutions require a seamless billing procedure which, in turn, implies integration with third-party payment services. To ensure a secure integration, your development team should implement a reliable data encryption process and anti-fraud mechanisms.
Choosing only industry-standard technologies. Everything, from the choice of the cloud provider to the programming language, should be entirely based on your business and industry requirements. Plus, you should also know in which countries you want your solution to be available and your technical team will have to ensure that service providers and technologies they choose are available in all the countries of interest for your business.
Difficulty to launch a full-fledged application from the start. A SaaS application is a complex solution that requires thorough preliminary research before development as well as a substantial post-release analysis. Setting your mind for a full-fledged solution right away can cost you lots of money and effort in the long run. A much wiser option is to develop an MVP first, this way you can:
- ensure quicker time to market
- present your solution to all stakeholders
- properly test it out with all the customers
- gain fundamental insights on how to further enhance your solution
A reliable software development partner can timely define and resolve any project challenges and risks, helping you eventually reach your business goals.
As we’ve covered common benefits and challenges associated with SaaS application development, let’s move on to the marketing stage that is necessary to properly promote your application and make sure it finds the right fit in the marketplace.
SaaS product go-to-market strategy
To demonstrate the ultimate value of your product to the stakeholders and customers, you should work on a strong go-to-market plan that will help you successfully launch your SaaS product. The go-to-market strategy includes:
- a clear value proposition
- product positioning in the market
- well-established customer profile
- target audience messaging
- channels to promote your product
If you develop a well-thought-out marketing plan at the very beginning, you’ll then be able to ensure that the SaaS development process is aligned with your main marketing strategy. Plus, with a clear marketing vision, you’ll know exactly which KPIs you need to focus on to measure the success of your SaaS product.
As you may see, SaaS application development requires careful planning and preparation. This way you can be sure that the development process and the final product release will meet your expectations. After you prepare for the SaaS product development, the next step is to find qualified technical consultants and specialists to turn your vision into reality. When looking for the right technical partner, pay close attention to whether your potential partner has SaaS expertise in your industry as well as a proper understanding of how to develop a secure and foolproof SaaS solution.
