What is SaaS (Software as a Service)?

This part covers the 12-step process to start a SaaS business (from the Agile development perspective). The steps include:

• Come up with a SaaS Idea Coming up with an idea for a SaaS model is the most crucial step that will define the success of the business. The idea should be unique, solve a real problem that is experienced by the target audience, and have a validated proof of concept (PoC).

  Some of the helpful tactics to come up with a SaaS idea:

  • Upwork Research Run a search across Upwork for developer job postings. What are the people hiring developers for? If that seems like a recurrent problem, a business could create a SaaS product for it. This is a great starting research method when creating an enterprise SaaS solution.
  • Twitter Research Conduct Twitter Research to gain a sense of what is trending. Look out for popular threads about SaaS ideas. Read through the comments and make it a practice to follow popular SaaS-related accounts that receive a good amount of traction.
  • App Store Method When the industry that will benefit from the SaaS product idea has been identified, the business can search popular apps using industry-relevant keywords or for apps that will be direct competitors on the Play Store and Apple store. For example, if the plan is to build an eCommerce app, running searches for Magento or Shopify apps can be helpful.

    Look for 1-star reviews on the apps to understand what people are complaining about. Right there, the business will get ideas about what SaaS product they need to build and what problems they need to solve for their target audience.

  • Interview the Target Audience Conduct interviews with the target audience. The focus should be on understanding what these people are using spreadsheets for. This is because that will be the work that they are doing manually on their end. Automating manual work is a great way to gain early adopters and drive SaaS growth.
• Create a Proof of Concept (PoC) Developing a proof of concept (PoC) helps validate the technical feasibility of a new and untried idea. Creating a PoC helps assure that the idea can be converted into a functional SaaS product.

  Here is a flowchart that needs to be followed when creating a PoC:

  
• Do Market and Competitor Research Once a business has “The Idea,” the next step is to conduct market research and define the competitors in that space. This will help to understand:
  • Who are the competitors?
  • What are their strengths and weaknesses?
  • What weakness can be improved upon?
  • What is the market value of their products?

  The answers to these questions will help with the next step of defining the requirements. In the case that the prevalent competitors are already serving the target audience in the best way possible, iterate back to the first step and rethink the idea.

• Choose Between In-House and Outsourcing Choosing between in-house development and outsourcing is an important milestone for any SaaS product. The in-house development option is viable if the business has a fully functional in-house development team and resources for the job.

  However, for a startup, outsourcing is the recommended option. Hiring an outsourcing team should be the go-to option for a business that operates under a bootstrapped setup and wants to speed up the development time.

  According to a Deloitte report, some of the most prominent benefits of outsourcing include:
  • Cost reduction
  • Flexibility
  • Speed to market
  • Access to tools and processes
  • Agility
• Choose the Right Technology Stack Choosing a technology stack means selecting the SaaS architecture, frameworks, database, backend and frontend technologies, and other supporting tools.

  Here is a table that summarizes the best technology stack for SaaS applications:

  Aspect	Meaning	Technology Recommendations
  Frontend Development	An interface that the users can see on their screens.	React Angular Vue.js
  Backend Development	Invisible to the users and helps build the core functionality of the SaaS app	Ruby on Rails Node.js Django
  Database	Maintains all the essential data related to the application at a centralized location	PostgreSQL MySQL NoSQL

• Choose a Cloud Vendor — AWS, Azure, GCP Choosing the right cloud vendor is extremely important for a SaaS product. The most popular ones include — Amazon AWS, Microsoft Azure, and Google Cloud Platform.

  According to Gartner’s Magic Quadrant for Cloud Infrastructure and Platform Services, all three cloud service providers have been pronounced leaders as of July 2021.

  

  To make the best pick, a business needs to analyze their requirements upfront and evaluate the options with those requirements in mind.

  Some of the parameters that they need to consider include:

  • Pricing
  • Compute Power
  • Storage
  • Technology Abilities
• Minimum Viable Product Development A minimum viable product (MVP) is a basic, launchable version of the SaaS product that supports the most critical features, or the features that define the product’s value proposition. Once the MVP is launched in the market, initial review and feedback are collected, forming the basis for further development efforts.

  The MVP development part is a combination of different micro-phase milestones that the business needs to take care of. Starting with:

  • Requirements Analysis This step is another crucial step where the SaaS product development process begins for real. The business needs to define the requirements for their SaaS product.

    The requirements are best defined with the help of the MoSCoW rule of prioritization( i.e., must-have, should-have, could-have, and won’t have features), where:

    • Must-Haves — cover the essential features that will go into MVP development. An example could be a login and authentication system for users. In Agile development, these features are placed at the top of the product backlog.
    • Should-haves — cover the important features that can go into further development cycles and can be prioritized post-MVP development. These are placed somewhere in the middle of the product backlog.
    • Could-Haves — cover the good-to-have features, but it won’t be painful to leave them out if necessary. These are placed somewhere at the bottom of the product backlog.
    • Won’t-haves — are non-important features that can be left out and can be left for further discussions (across the product’s lifetime).
  • Design Start with creating a prototype for the SaaS product. A prototype will help in validating the UI/UX flow of the product. This stephelps answer what the product will look and feel like.

    The business can present the prototype to the development team and the stakeholders and gain feedback. Also, this helps attract seed funding for the SaaS product.

  • Code The developers work on the coding part in time-boxed sprints as a part of the Agile development process. The developers pick the tasks from the prioritized product backlog and conduct sprint planning before starting the development process.

    In each sprint, the developers work on every user story (a feature that adds value to the user’s journey) and submit it to the testing team for review.

  • Test The testing team conducts various manual and automated tests for the completed tasks to identify bugs. The Agile testing team also works in time-boxed sprints to complete the tasks at hand.

    The testing report is then sent back to the developers for fixing errors and bugs. The process continues until all the user stories are properly functional and meet the customer’s needs.

• Choose the SaaS Pricing Model Planning the pricing for a SaaS product is another essential part of setting up a SaaS business. The various pricing models that are relevant to the SaaS industry include:
  • Free-Trial: Offer the product for free for a week or 14 days with limited accessibility
  • Freemium: The subscription is free, but the functionality access is restricted
  • Flat Rate: There is universal pricing for everyone irrespective of users and business size
  • Pay-as-you-go Basis: The price depends on business scalability (i.e., the customer pays for only what they use and can change their plan as and when they need to add/remove features)
  • Per User: The price depends on the number of users of the SaaS product. More users means higher pricing, and vice-versa
  • Feature-based: Pricing depends on the features that the customer opts for. The more features the customer gains access to, the higher the pricing
  • Business Size: Pricing differs based on business size. For instance, the plan for a startup, a mid-sized company, and an enterprise will be segmented into different groups
• Plan SLA (Service Level Agreement) A service level agreement (SLA) is a formal document that highlights the software vendor’s offerings and the level of service that a customer should expect.

  An SLA primarily covers:

  • Service description — what the product does and how it will benefit the customers
  • Service reliability — the uptime guarantees and handling in case of downtime
  • Reporting — how can the customers reach out to report any issue related to the product
  • Updates’ Information — how often the SaaS product will be updated, and through what medium will the changes be conveyed
  • Penalties — what will happen if the SLA conditions aren’t met
  • Response Time — how much time will it usually take to respond to the raised ticket
• Launch Once everything is in place, the business can plan for “The Launch” and they will need to create a launch strategy for their SaaS product. They need to follow the “ship it fast” approach to make sure that they can enjoy the early win.

  Ensure that the following steps are in place:

  • Plan a launch date
  • Develop a website and a mobile app for both Android and Apple store
  • Create an introductory blog and email
  • Reach out to the influencers who can talk about the product
  • Plan a webinar/podcast for product introduction
• Market Creating a product is not enough — the business needs to build awareness around it too. Invest in marketing campaigns to create hype around the product. Twitter, Instagram, Facebook, and LinkedIn are good platforms to start with.

  The following digital marketing tactics can be leveraged to gain early adopters:

  
• Continuous Improvement Continuous improvement implies that a business needs to offer regular updates and upgrades to their SaaS product. Maintain a shipping cadence for the product (i.e., do not let the customers wait). Fix errors and introduce new features and functionalities throughout the product’s lifetime.

  Here are some strategies to follow:

  • Keep digital channels open for feedback. Listen to what customers are saying about the product and tend to their needs.
  • Offer small and quick updates over large and slow ones
  • Maintain minimum technical debt. This will help to maintain minimum cruft and iterate through the product in a fast and easy way
  • Consider code refactoring seriously. This will help in eliminating the poor design choices in the code. Thus, it will lead to better continuous improvement cycles.