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Can you remember the last time you bought a licensed CD or a program and set it up on your PC? I bet you will have a hard time remembering that. And that’s for a reason, as the majority of apps you use in your work or everyday lives are results of SaaS development.
Thanks to SaaS development, businesses successfully provide their services using cloud computing and subscription-based monetization models. As of 2021 the overall market value of Saas apps reaches about $145.5 billion. And this number is expected to reach $171.9 billion by 2022.
Though much demanded and popular, SaaS development is at the same time a very competitive business domain. So building a SaaS application is inconceivable without knowing the basics of SaaS development.
I have dealt with SaaS development multiple times. And from my experience I know all the ins and outs of this process. In this article, I will highlight the characteristics of SaaS app development and unveil the steps of this process. So let’s dig right in!
What is a SaaS Platform?
SaaS is short for “Software as a Service.” And it reflects the meaning of the concept. This is a business model where the provider delivers a service to you under a subscription. That said, the user does not have to purchase the software along with servers and additional software. Usually, the whole processing is carried out on servers in digital clouds, to which users access via browser, mobile app or API. In other words, the user works with a full-fledged prepared solution online.
Compare it to real estate. Buying a house and renting both have their pros and cons. Yet, in some cases, renting wins the battle in many respects. One of them is that the owner holds the responsibility for the maintenance rather than the leaseholder. And, well, affordability also plays an important role.
The same works for SaaS applications – they put less burden on the users than the purchase of licensed software — no need for a user to waste time for the program’s setup on every user’s computer. Instead, the SaaS app providers take on all the technical aspects of development and maintenance.
So the benefits for the users include:
- Cost-efficiency: monthly subscriptions are much more affordable, comparing to the purchasing software and all the additional tools;
- Scalability: if the number of users in your company grows, a SaaS app is easily scalable for that;
- Reliability: Servers of cloud-based applications are situated all over the world. Even if one or several servers go out of order, the app will remain online;
- All-time availability: SaaS applications are accessible any time, from anywhere, and via any device. All it takes is singing in;
- Proof of concept: Using a SaaS application, a user has the opportunity to try the service and decide if they want to keep using it;
- Enterprise modes: SaaS apps usually offer an enterprise package for businesses. They include special features, tools, and methods for team collaboration.
Examples of SaaS Applications
The simplest examples of SaaS applications are Google Docs or Microsoft Office 365. Both document editing software you would need to purchase and install some years ago. But once the processing part moved to the cloud, users can work on the document online from any part of the world.
Another example is Plai – an online tool for performance management. Plai helps companies track the progress of teams’ OKRs. Companies do not need to bother about the installment, setup, or security issues thanks to the SaaS models.
More complex examples would be Shopify, WooCommerce or Magento, and other e-commerce solutions. All of them alleviate the process of building e-commerce websites, allowing the launch of an online shop within several hours or even minutes. And that for as much as a $200 subscription fee.
Benefits of Building SaaS Applications
It is not surprising that from the perspective of users, the benefits of SaaS applications are manifold. But it is less evident that building SaaS applications can also be advantageous for startup founders. So here are the benefits of making a SaaS application business.
Flexibility of development
Building a SaaS application is a continuous process that goes beyond the moment of the product’s launch. Even if users are already using your product, it does not mean you can call it a day and stop exploring your target audience. It would be better, instead, to trace the performance of your app and gather users’ feedback to suit their needs better.
Expert’s Tip: You can even add custom features to make your applications suitable for a particular business. For example, once we got our first users at Plai, some of them asked to integrate custom admin boards. So we did it to provide a better customer experience.
Working on a subscription-based model, you can enjoy regular and long-lasting revenue from your loyal customers and newcomers. And this, again, enables you to reinvest and iterate your business continuously.
Larger potential customers’ base
Remember the “lower upfront costs” I mentioned before? Well, this benefit works both ways. Due to lower up-front costs, more customers can afford to pay for your product. That said, you can count on a more extensive user base, adapt to new users and integrate enterprise models into your SaaS application.
Providing bigger value for customers
In SaaS business, you have the freedom to explore your users, adapting your application to their needs. This gives you a real opportunity to create a valuable service that will become a one-stop product for your customers, who will be loyal to you. Even if the primal version of your product was not accepted well, you could always iterate and improve your service continuously.
Issues to Consider Before Developing a SaaS Apps
SaaS app development differs from building more conventional apps with a one-time payment. In particular, there are some things to take into account before starting the development.
Choose cloud service provider
SaaS applications are inconceivable without cloud services. So picking a proper cloud service provider for your SaaS app is the lion’s share of your product’s success. Thankfully, you have a wide variety to choose from. It can be a big-name cloud provider, like (Microsoft, AWS, or Azure) or a local service. Here are the factors that can influence your choice:
- Security: which security services would suit your product best?
- Price: how much can you pay for a cloud provider?
- Services: does a provider have the services you need for your business? (for example, hosting, file storage, databases, management services)
- Market coverage: does your provider operate on your market?
Expert’s tip # 1: Big-name providers always have many services and tools to adapt to the growth of your business. So if you have the potential to scale, with providers, like Google Cloud Platform or AWS, you always have the space to scale and grow.
Expert’s tip # 2: Using a big-name provider can be excessive if you want to enter a specific local market. In that case, you can find a cloud provider with servers explicitly situated in the demanded region. By the way, combining several providers can also be a viable option.
Ensure security of your SaaS app
Working with SaaS business, you always deal with databases. Moreover, when data is kept in the digital space (cloud), security issues arise twice as much. Thankfully, cloud providers usually have the security issues covered.
For example, Amazon Web Services (cloud-computing provider from Amazon) offers a variety of security instruments that can eliminate unnecessary traffic, restrict public access to some components, and monitor public repositories. Such services include firewalls, public access settings, and honeypots.
Integration with third-party services
Building a SaaS application, you have to cover many functionalities to suit all users. The bad news is, it is effort -, time -, and budget-consuming to code everything manually from scratch. The good news is that you do not have to. Instead, you can integrate existing services from third-party providers. For example, in many apps, you can see integration with Google Maps, social media services, CRM, or payment services.
When we worked on Plai, we integrated with Slack – the business communication platform for teams. Thus, Slack took over the notifications and used data processing. This integration saved a lot of our time and efforts, and let us focus more on business-related issues.
7 Steps to Build a SaaS Application
So we have sorted out the preliminary issues of SaaS app development. Finally, we will go on to the process of development itself. Here are 7 steps that will lead you to a SaaS product:
Step 1. Market Analysis
So you have an idea of a SaaS application. Great, but you should start exploring the conditions for its development. The first step is to research the users, competitors, and the volume of the market. The main purposes of this step are:
- to identify the target users;
- understand the users’ main problem;
- see how users are solving the problem now;
- suggest how you can improve it.
Expert’s Tip: at this stage, it may occur that there are none or only one or two competitors in the market. Surprisingly, this is not always a good sign. Probably, this is a sign that this market niche is void, and there is no necessity for a new solution to be found.
Step 2. Hypotheses’ testing
As a result of the first stage, you have suggestions about improving the solution for users. But these are just hypotheses yet. To validate them, you need to complete a round of user interviews:
- interview your potential audience;
- know want your users want and what they need;
- explore what stops them from achieving their goals;
- make a prototype of your solutions and try it with users.
Expert’s Tip: To better understand how your user moves along your app, I suggest making a Value Proposition Canvas (VPC) and a Customer Journey Map (CJM).
CJM can show how users are solving their problems now. This is important to generate opportunities for how the product can solve these problems better.
VPC is a good artefact as well, which helps to unveil your users’ needs, pains, desires and generate product solutions including these factors.
Step 3. Validation of users’ ability to pay
Another essential step in developing a SaaS app is making sure your users will pay for it. To explore that, I recommend carrying out interviews and testing by asking insightful and right questions.
Step 4. Choose the right monetization model
Another revenue-related issue is the monetization model of your SaaS application. The regular choice here is the subscription-based model. This model has proved beneficial for many businesses. Yet, as practice shows, the subscription-based model also brings some concerns.
First, using the subscription-based model means you invest in users’ inflow here and now only to get the revenue month-by-month later.
Second, you need to ensure your customers use your service regularly and for a long time to profit and cover all expenses: product development, office rental, and administrative costs. So the major part of your investment will cover customer acquisition and retention.
Expert’s tip: Things can be even more complicated when you are a SaaS startup. In that case, you need to have a sufficient budget before the product’s launch. Thus, you will avoid the situation when all money has been invested in user acquisition and product development, but monthly payments from users have not started yet.
Step 5. Define the tech stack
By technology stack, we mean the technologies that will be used in your software development. This will include the front-end (frameworks and libraries), back-end (frameworks and libraries), databases, servers, infrastructure configuration.
Step 6. MVP development
Finally, we are ready to build the initial version of the SaaS product – Minimum Viable Product (MVP). This is a basic model of your application, developed within minimum timelines and with minimum effort. An MVP covers only the crucial functionalities of your app and unveils the core idea behind the product. The purposes of an MVP can be:
- Testing the product’s hypothesis with early adopters;
- Pitching the initial version to the investors.
It may come as a surprise to some clients that we build a limited version of the product instead of a full-fledged development. But for startups, it is crucial to validate the basic functionality first and, if accepted well by users, go on to the entire product development.
You can learn more about MVP, its purposes and peculiarities in our article How To Build MVP: Step-By-Step Guide.
Learn about famous MVP cases and their lessons in 3 Minimum Viable Product Examples To Start A Digital Business
What’s the difference between MVP and PoC? Learn in MVP Vs PoC Vs Prototype: What's The Best Approach?
Step 7. Testing and iterating
Once created, your MVP needs testing with early adopters. In the testing process, you actually check two things:
- if your idea is viable for users;
- If the implementation of your idea is good enough for users to get it.
At this stage, it is crucial to invest time in communication with users. The more feedback you get from users, the more insights you will get about improving your SaaS application. All these insights will be used in the next iteration of the application.
Step 8. Maintenance and development
Once the product is launched, the new story begins. The story of maintenance and further development. The thing is, you never stop iterating your product, especially when it comes to SaaS applications. The product maintenance includes:
- Seeking growth opportunities;
- Finding unique opportunities;
- Seeking new customers and expanding your TA;
- Detecting and fixing bugs.
From my experience, I know that SaaS app development differs from other software development. This is a complicated process that requires many factors to work altogether:
- Experienced team of developers with expertise in the niche;
- Continuous user research and improvement of the product;
- Active customer support and communication;
- Robust sales activities;
- Marketing and PR promotion.
Though challenging, SaaS app development is a rewarding business that can ensure stable revenue and scalability, sought-after in many business niches.
If you want to create a SaaS application business, contact us to discuss how to make your idea come true.