There are not only technical differences between SaaS and bespoke application design, there are also philosophical differences.
In this article, I will blend the business and technical aspects of designing SaaS apps to help you design a more successful product.
After reading this article, you will learn:
- How does SaaS differ from traditional software in terms of deployment and licensing?
- What is the significance of SaaS architecture in today's software development landscape?
- What are some of the challenges that developers might face in SaaS application development, according?
- How can a SaaS product gain the trust of its customers, especially when entering a competitive market?
- What is the importance of defining a unique value proposition for a SaaS product?
- How does multi-tenancy affect the development and security of SaaS applications?
- What factors should businesses consider when choosing a pricing strategy for their SaaS products?
Table of Contents
What is SaaS?
SaaS which stands for Software as a Service, is the most popular cloud computing solution. It refers to software that runs on the infrastructure of the SaaS providers. This entails providing and maintaining software through a subscription model. The SaaS product is hosted in a cloud environment, eliminating the need for installation on a computer and the sale of lifetime licenses.
Users of such software do not have to deal with complicated configurations or updates. They always have access to the newest versions of the software. Such programs can be used anywhere in the world, from any device and both a web browser even without an internet connection. A great example of a Software as a Service business model is Adobe’s Creative Cloud - which moved from traditional software to a SaaS model.
SaaS offers benefits like:
- Security - cloud provider ensure maximum security of customer data and data security and all data,
- Cost efficiency - no need to buy and maintain hardware,
- Reliability - servers can be located around the world so even if one of them goes down, the app will remain online,
- Scalability - you can upgrade or downgrade your plan with a few simple clicks according to your requirements.
What is more, a SaaS-based application can be used on multiple devices (including mobile devices) with a single login, contrary to traditional software. Users also usually have the opportunity to test the software before buying the subscription which is a significant advantage.
Why create SaaS in 2023
SaaS architecture design is gaining popularity since it does not require developing from scratch and maintaining it. It is used through software licensing or subscription. Therefore, you only pay for the license, and the hosting and maintenance of the equipment will be handled by a cloud services provider.
A SaaS product can become a separate business where you create a system for others or an additional revenue when you create a solution for your company and share it with others.
It is predicted that by 2022 SaaS applications will bring in $253.9 billion in revenue. Where, for example, PaaS (Platform as a Service) will bring $113.30 billion in revenue. On the other hand, IaaS (infrastructure as a service) will generate $158.40 billion in revenue. Of course, each of them has its own specificity and is intended for the implementation of different types of projects. Whereas SaaS products are usually specialized and tailored to specific user needs.
Why create SaaS in 2023? It is evident that it is a cost-effective way to start using a system right away without the need to develop your own software. Those SaaS systems provide upgrades, maintenance and support.
For vendors, SaaS solutions provide regular revenue from users providing the software is in high demand and can serve a lot of people.
Challenges of SaaS Application Development
With every development come challenges. Having a business is always a risk. Although it is impossible to foresee what problems you may encounter on your way, there are a few most frequent problems in SaaS application development.
- Lack of trust from customers - without trust you will not have customers, especially in the SaaS model. Large SaaS companies have loyal users that will follow them everywhere, but when you are entering the market it may become a problem. To gain people’s trust show them security, and care about your user experience and user interface as well as your logo and branding.
- Small target audience - although having a one-of-a-kind product is daunting it is equally dangerous. With too small of an audience, your solution will not bring enough profit. To avoid that, try a horizontal development - by expanding functionalities. Do not forget to conduct a business analysis to further understand your target customers’ needs, competition and ongoing trends.
- Poor idea - there are in fact no bad ideas, just poor execution of good ideas. However, there is no sense in developing an application that will not meet current trends nor customer demand. For example, a CD recording application will not be of any use in 2020, but a CD recording that allows users to save and share the data would be much better.
A step-by-step guide to a successful SaaS app development
1. Define a unique value proposition that will help your SaaS stand out
There are many SaaS solutions to choose from. Before you start developing your own, you need to completely understand the idea behind your product (business applications), how it will look like, and what will its functions be. You also have to be aware of who your target customers are and why they will want to use the solution, therefore, what will be necessary to help them reach their goals.
You should always keep in mind that you want to create something different, something that future users will enjoy and want to continuously use and recommend to others. Start with thinking about what you are passionate about that has not been created yet or what can annoy your target audience in those existing solutions or even, what annoys you personally. This may bring you ideas for your value proposition which will differentiate you from other solutions.
At this point, it is worth also thinking about the UX/UI, customer support and third-party integrations. Maybe those are the things that your competitors are lacking.
You should research similar products on the market and understand how you can solve the users’ problems better. Market research helps to understand whether the SaaS project you are about to delve into has a potential audience as well as to find your customers’ aches and pains.
SaaS vendors should focus on showing the value to individual users first, instead of selling to managers or decision-makers who will not be using the software on a daily basis. Retaining customers is about continually showing them the value of your product.
To create an amazing SaaS solution you should know the significant feature that distinguishes it from other solutions and deliver it as soon as possible. This will give you the opportunity to test your SaaS idea with real users and after launch, add new functionalities.
Ask yourself which features are the most important and fulfil the app’s main purpose. Get rid of the ‘nice to haves’ before implementing the ‘musts’. Start with an MVP and share it with your audience.
2. Design the customer acquisition process
While developing your SaaS product you need to take into account the average cost that it takes to acquire a customer, and then how much profit the average customer brings in. In other words, you have to consider the customer acquisition cost (CAC) and compare it to the customer lifetime value (LTV). Your aim should be to recover the CAC in less than 12 months. The CAC and LTV will guide you through finding your most profitable and target clients.
You have to put yourself in your customers’ place and write User Stories consisting of 1-2 sentences describing how your system will respond to their actions. Do not forget to include the negative cases. Those ‘As a
SaaS solutions have a longer sales cycle in comparison to other businesses. The average length of the sales cycle for Software as a Service is close to 3 months. In terms of business, it is a long time to maintain a relationship and convince somebody to buy your product. On the other hand, taking into consideration what goes into the buying process it is no surprise that the customers take their time.
You should aim to create a close relationship with your customer in order to start a successful collaboration without looking too desperate. First of all, your potential clients should get acquainted with your business, find out what are you about. In many cases, they will be at the very beginning of their road and may not even be aware that you are what they are missing.
The second step would be to engage them with some of your content. Subscribing to a newsletter, and getting downloadable docs are what attract attention. In the next two steps, your consumers should explore your offering and hopefully convert into paying subscribers. You can make use of organic traffic by creating a SEO strategy, building your brand on events and showcasing your product on paid advertisements. Those activities will be based strictly on your target audience, but it is the best option to implement them at some point.
Your job is to retain customers and keep them coming back for more with exclusive newsletters and discounts for your loyal clients. Creating a supportive atmosphere is also an important part of customer retention. Boost your customer experience with welcoming emails and propose onboarding services to the new ones. Nurture your relationship through regular interactions.
Development of a SaaS architecture is connected to storing data in the cloud and many new customers may hesitate to do so. With the GDPR laws security of personal data is an even bigger problem, so make sure your product is GDPR compliant.
3. Design multi-tenancy with performance and security in mind
What is special about SaaS websites is the fact that they are self-service. This means that anyone who is interested in a given product can register and start using the service straight away. Users should be able to customize the solution to their requirements and needs.
Multi-tenancy means that a single instance of a software application is meant to serve multiple customers and it is the key to the success of your system. This is achieved either through separate databases or one database that displays adequate information to particular users. Thanks to that the development will be faster since developers can make use of a previously written code base to expand the service and apply changes. Multi-tenancy also means that the application should be very secure since the infrastructure is shared among all users.
If you want to find out more about multi-tenancy and why you should choose it, read our article Why choose multi-tenant architecture for SaaS application.
Application’s multi-tenancy can happen at different layers of the system:
- Infrastructure Layer
- Database Layer
- Application Layer
Based on those layers, we distinguish four types of multi-tenancy models that you can use to architect your SaaS application.
- Isolated Tenancy: the most basic level of tenancy where none of the layers are shared among the tenants. Every tenant has its own infrastructure, application and database. The infrastructure is isolated.
- Infrastructure Tenancy: here the infrastructure of the application is shared across tenants while the application and database remain separate.
- Application Tenancy: the application code and infrastructure are shared among tenants while the database remains separate.
- Shared Tenancy: in the last tenancy model, infrastructure, database and application are shared among the tenants but each tenant in the database is considered to be separate.
Your SaaS application should also be able to integrate with other services, for example, online payment solutions. Since your system will be available online it should be highly performant. An application with good performance should always be available and able to serve tenants of any size.
4. Choose a technology stack
Estimate the platform’s scalability and potential profits to choose one that aligns with your use cases the best.
Then it is time to find developers that will help you bring your idea to life. Do not hesitate to ask for their opinion about the selected technologies. Bear in mind that the new technologies will have a limited talent pool with a rather fresh community around it.
5. Choose your pricing strategy
The pricing strategy can be the make or break of your cloud-based application. There are quite a few options available like:
- Freemium - your app provides standard functionalities for free and can be expanded to more premium paid features. This model allows users to get to know the application, but remember to provide enough functions to attract customers while not being too generous
- Subscription - similar to freemium, this model is based on a recurring fee (eg. on a monthly basis) for extra content. It is best suited for content-focused applications like video hosting app
- Paid applications - your application is available for a one-time purchase. The advantage is that even if the user stops using your product, you still get the money. On the other hand, customers will be less willing to pay the upfront costs if they are not sure of its quality and usefulness
6. Launch, test and improve
When your application is ready to be released it is time to test it in-house before releasing. If there are no bugs and your product is working as required you can launch it, therefore, converting the first users into testers. Apply feedback and move on to adding new features. This process is called the iterative and repetitive process.
Launching a new product is connected to a lot of marketing through social media, online communities and advertising. You can also start your own blog.
You should track metrics, even if it sounds boring and time-consuming. Find out which ones are relevant to your business and keep an eye on them. This will give you the opportunity to improve the performance, resolve problems as quickly as possible and help you make decisions with more confidence.
When designing a SaaS application we have to take into consideration many factors.
First of all, we should always remember that a good idea comes from proper market research and a well-thought-out client persona.
After the initial process of creation, client acquisition is next. If you manage to acquire customers, it is also important to take care of your relationship by providing support and keeping a conversation going.
Finally, your application should be secure and compliant with international restrictions. Multi-tenancy in practical terms is what differentiates Software as a Service from other subscription-based solutions. A well-designed and developed SaaS application brings benefits to both the customer and the developer.
If you need help with the development of your SaaS website, check out SaaS Development Company and our expert developers team and read the article on Top 5 SaaS Development Challenges You Need To Know.