How to create a SaaS business – introduction
Today the Information Technology market is actively developing such business model as Saas, which literally means “software as a service”.
In fact, this term is understood as applications for business, access to which the user (the customer) receives via the Internet. In this case, the payment model does not require the purchase of an application, mostly access to the service is provided, for example, by monthly subscription. Sometimes such scheme is compared to renting, but this is not quite so – this model is more like a subscription, because in fact the customer receives the service, and all the costs for developing, maintaining and physically hosting the servers are taken over by the vendor.
But before we move on to the discussion of how to create a saas business let’s figure out why this is necessary and what are the advantages of this approach to buying software and building business processes? Probably it’s not a secret that the traditional scheme of buying / licensing software has significant shortcomings and is already obsolete. What is meant:
- Large purchase costs. With a one-time payment, large funds are withdrawn from the company’s turnover. And the more products or licenses you need to purchase, the more money you need to spend, which is obvious but not always easy to perform;
- Insufficient or excessive functionality. Often, in pursuit of the price/quantity of functions, companies cannot always find the “golden mean” of the licenses granted to purchase. This results in an inadequate or excessive set of functions, which makes the work with the application difficult, and in the second case also unreasonably expensive. SaaS model allows paying for the required set of functions and the necessary period of time.
Therefore, this approach is considered an alternative to the classic version of the purchase of software. Of course, this approach has both advantages and disadvantages, but this is discussed below.
How to create a SaaS business – know the difference
If you want to know how to create a SaaS business, let’s figure out the main differences between the classic software buying model and the modern (SaaS) one:
- The purchased application was originally developed and designed for online access. Thus, the client has the opportunity to use the program or service at any time anywhere on the globe;
- The payment for the use often occurs either monthly (for the provided functionality) or for the amount of data or traffic that the client has spent. In both cases, a fee for software and users support is already included;
- From the previous point, smoothly emerges the next plus – product updates are invisible to the end user, and the customer is not burdened with the problems of the new version transition;
- One software can be used by several clients;
As were mentioned above, using the SaaS approach, customers do not make additional license payments. The customer pays for the use of software, which in many cases excludes the possibility of spending significant funds on the purchase of the product. Also, if the client temporarily does not need to use the software, then you can “freeze” the use of services. Thus, the payment for using the product will not be charged. But like any phenomenon on the IT market, the SaaS model has both positive and negative sides. As we said above, this issue will also be touched upon in this article.
If you are wondering about how to build saas platform, you should definitely know it’s strong sides. So, for this type of service it would be:
- Software as a Service model minimizes the requirements for hardware and operating systems. Most often, the only thing required from the user is the Internet connection and the browser. Modern solutions are cross-platform and cross-browser, which allows working equally well both in the office on the desktop and with the smartphone on the trip. Thus, the cost of hardware for the customers’ companies is reduced, because the main calculations and actions are producing on dedicated servers.
- Another advantage of using this approach is the maximum ease of work and mobility of teammates. Using cloud services, a customer can be always sure that his employees are able to work anywhere from any device;
- A reduction in financial expenses for the acquisition of the product, its implementation, and subsequent support could also be mentioned as advantage;
- On the other hand, such distribution model helps to strike unlicensed software and stops any attempts to misappropriate it. On the developer’s side, this is a definite plus in the company’s revenue and reputation – selling the original product, the company worries about its reliability and support. On the user’s side, this is a plus in terms of information protection and additional technical support;
- Also, confidential information safety can be considered an undoubted advantage, because when customers want to build SaaS platform, they could integrate a ready-made solution into the own infrastructure. Thus, all confidential information will remain inside the company, with no need to share it with third-parties.
But before we proceed to the question of how to start a SaaS startup, It also would be better to get acquainted with the shortcomings of this approach:
- If you use the computing power of third-party companies and will transfer commercial data, there is a risk of leakage and/or disclosure of such information. Therefore, you should be extremely careful when choosing a contractor, hoster and provider company;
- Also, an indirect disadvantage may be low productivity of the software, but only in case of unstable or bad Internet connection on the client side;
- There may also be some downtime, which is unreliable and sometimes expensive from the perspective of the employer, but again only in those moments when there is an unstable connection;
- However, all these problems are becoming less relevant day by day, because the level of the evolvement of modern technologies fully allows quick and stable broadband Internet connection. Moreover, data encryption allowing protect the information accurately and carry out an almost untraceable confidential information exchange.
Therefore, all the above disadvantages are offset by the development of technology every day, and the above-mentioned advantages cover almost any cons. Thus, the SaaS approach allows to deploy the business and optimize workflows as efficiently and cost-effectively as possible.
How to create a SaaS business – examples
To make it easier to understand what the software as a service is, let’s look at some examples of what can be mentioned as such services:
- A typical example of the SaaS approach includes Gmail, iCloud, One Drive (or Microsoft Office 365) – services that allow organizing the work of one employee and the whole enterprise, providing shared access to files, resources, and corporate mail;
- ERP and CRM systems for managing employees and projects;
- Services for hosting websites and dedicated servers.
Read more about our experiences of creating SaaS business and best SaaS product ideas based on the existing successful services.
To understand all the information in details and on bright examples, it is necessary to note such solutions as:
- Google Apps for Work is a set of services and applications for business that carries a mail service with extensible functionality and the ability to integrate with the enterprise internal services. Also, Google provides other useful functionality, which is also available by subscription and allows to store a large amount of data, optimize business processes and establish communication between company’s departments;
- A similar service is provided by Microsoft, releasing Microsoft Office 365 to the market. A distinctive feature of this solution can be considered a slightly different approach – the company provides not exactly a SaaS solution, but rather a “soft plus service” approach. So clients have the opportunity to use both locally installed software and its cloud versions. Another advantage is the abundance of various payment plans and the provided functionality for workflow, communication and file sharing;
- Globally, this category includes Amazon Web Services (AWS). The company provides platforms as services for deploying IT infrastructure. For example, cloud computing services, public and private clouds, as well as data storage services.
How to Create a SaaS Business - afterwords And now let’s find out how to create a saas business. In simple words - when customers refuse to install local programs/environments and start using a certain service as a service, they becoming SaaS consumers. Considering simple examples, let's figure out what is needed in order to "raise" the service of document management and/or email one (e.i. creating a saas business): Purchase or rent computing power; Configure servers and/or failover clusters; Install and configure custom software. At this moment the most interesting begin because in order to fulfill this point it's necessary to have a finalized product. And this means that you need to develop it by your home devs or order it from another company and after that proceed to the first step; And don’t forget to maintain the infrastructure in the future, because you need to monitor not only the software and hardware but also to strike spam-attacks and ensure that your servers are not in the blacklists of other email services. However, the SaaS approach offers many advantages that can satisfy both the needs of customers and companies that provide similar services. We hope that the above-mentioned facts could prove this.
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