The software-as-a-service (SaaS) model is one of the fastest-growing paradigms in the cloud age and will only continue to grow in importance and sophistication. Max Nirenberg is the chief revenue officer and managing director for North America at Commit USA. He shares his experiences, challenges, and best practices with developers to help them plan a successful SaaS journey.
The SaaS market is growing rapidly. Gartner’s survey forecast that public cloud spending by end-users will reach almost $333 billion by 2021. SaaS-based services are expected to see the greatest growth at $122.6 billion.
SaaS is a simple concept. SaaS is an ongoing service model that allows the provision of software and services via a web interface hosted in the cloud. You can access this solution from any location, at any time. End-users don’t need to download, install, or update the software. While this ease and accessibility drive adoption, it also presents new challenges to technology providers and developers.
1. Centralized Operations – A Method for SaaS Success
Transitioning to SaaS providers is a paradigm shift for both startups and enterprises. It can have a profound impact on people, technology, and processes. The shift must occur once everything is provided “as a service.” This applies regardless of where you are located, in what industry, or what service you provide. End-users and customers will be able to purchase a fully managed service that meets all requirements. They expect it to function properly without them having to do anything.
Although the SaaS model eliminates the need for lengthy, onsite installations, it is still necessary to maintain high-quality service. This requires significant upfront investments in infrastructure. Customers also need support and updates. This will have an impact on operations, finance, and sales as well as other departments that need to be coordinated.
If done right, the shift to SaaS providers forces organizations to be more centrally managed, coherent, and cost-effective. Silos and inefficiencies can quickly become unsustainable, regardless of whether you manage everything internally or partner with a third party.
Organizations will need to standardize and implement automation wherever possible to avoid mistakes and stay competitive. DevOps best practices should be incorporated into teams’ operations. This will allow for more frequent updates and easier integration/delivery/deployment (CI/CD).
Imagine CI/CD pipelines that aren’t well-tuned and viewed from an overall perspective. This could lead to certain development processes being unable to be integrated or merged in a holistic way. Organizations may find themselves spending more time managing integrations and delaying critical fixes or updates.
2. Integrating With Others
SaaS developers need to be able to deliver better applications and services. They also need to ensure that their solution seamlessly integrates with customer environments.
No more complex configurations or service providers spending hours on the onboarding stage. SaaS providers need to create APIs that make it easy for users to exchange data or align their infrastructural and functional resources.
3. The Subscription Model Revolution
Users subscribe to SaaS products or solutions instead of paying one time for the right to download a product. The entire pricing model changes from large monthly lump payments to smaller monthly payments per customer referred to as monthly recurring revenue (MRR). Management must recognize that cash flow is changing and that the business is different.
Developers need to build the solution so that it can be priced appropriately. Each feature must be developed so that the subscription level matches the level. A finTech company that specializes in e-payments might offer customers the ability to make payments within a country at a certain price level and international payments at another.
SaaS companies need to be more focused on customer retention than on passive customer satisfaction. Companies must ensure that they maintain customer relationships in today’s cloud-based era. They also need to be responsive to customer needs and keep their products current. SaaS providers need to map their customers’ journeys to be able to determine when and how to sell to them.
4. New Ways of Assumed SLAs – SaaS and Service
SaaS can often mean a change in a company’s culture and business model. This could include a commitment to meet new, often pre-selected, service level agreements (SLAs), and provide more ongoing support at all levels, including software, cloud, and application infrastructure.
A SaaS vendor may need to have a 24/7 support center in order to ensure key performance indicators (KPIs), are met for business continuity and timely updates. This is where organizations need to decide whether they want to do it in-house or with a service provider. Vendors may also be required to provide security, operations, and monitoring components of their services.
A top IT service management (ITSM), such as the ITIL framework, can be used to help teams establish the necessary processes and meet new SLAs.
5. New Ways of Security and Compliance
SaaS companies are responsible for information security incidents such as hacking and leaking information. This can cause reputational damage. SaaS applications need to be cautious about what data they access, who has it, how it’s processed, transferred, and where it is stored. SaaS developers must include processes to determine the length of data storage and how it is deleted from any databases.
It is important to adhere to data privacy regulations, which are continually changing. The general data protection regulation (GDPR) requires that data be anonymized. To ensure that healthcare tech is compliant with the guidelines of the Health Insurance Portability and Accountability Act (HIPAA), teams must encrypt certain data at all levels.
Before a company launches an application, it is crucial to ensure that all processes are in place to comply with regulations and protect data. Regular updates are equally important to keep up with any changes in regulations or guidelines. This could involve multiple stakeholders and experts.
6. Smart Staffing With Flexible R&D
It is crucial to use a multi-disciplinary approach when building a SaaS solution. This includes specialists in cloud environments, compliance, infrastructure management, customer services, and compliance.
Although a holistic view is essential, not all experts will be required at the same time. Multi-disciplinary development services can be used by companies who want to make savings when developing and deploying SaaS solutions. Flexible R&D is a method that allows companies to access the best talent in the world and only pay for what they use.
Build Your SaaS Strategy for the Future
SaaS is growing, but it’s also becoming more complicated and difficult to adapt to the latest technology such as IoT and AI. While this presents many opportunities, those who succeed in the SaaS industry will need to take into account all aspects of the SaaS model. This includes account management, compensation structures, and meeting expectations for seamless, secure availability. This will help teams thrive in this rapidly changing market.