How Does a SaaS Model Work?
If you are planning to integrate SaaS solution with your business, it is pertinent to improve your knowledge about SaaS. Software as a Service or SaaS, as we commonly call it, is a delivery model wherein a centrally-hosted software solution is licensed to users through a subscription plan. Any organization that rents its software via a cloud-based, central system can be called a SaaS development company. Some examples of SaaS include Google Workspace, SAP Concur, Salesforce, Cisco WebEx, Dropbox, and GoToMeeting.Not to forget, the finest example of SaaS is our favourite Gmail, which we’ve been using for years to communicate through emails – personally and officially both. Google hosts Gmail and users access it through their browser as a client.
Why Should You Adopt SaaS Business Model?
Not sure why SaaS business model is recommended for you? Let’s try to understand with the help of the benefits it offers. There are some amazing advantages of SaaS that are motivating most companies to adopt it. The biggest advantage of SaaS over other traditional models is that SaaS is already installed & configured. Other than that, SaaS advantages include:
- Reduced costs
- Easy integration
- Upgrades (new releases) are easily available
- Performing proofs-of-concept is easy
There is no exaggeration if we say that SaaS is the ultimate business model these days. As many as 40-50% of businesses have already started using SaaS for running their operations. SaaS operates in the cloud and these are usually accessible through desktop & mobile apps as well as web interfaces. SaaS is owned, managed, and supplied remotely by its providers – one or more than one. SaaS companies are responsible for maintaining servers, software, and databases that enable products to be used online (over the web). Users can easily access and make use of the software from any device connected to the web. Usually, the users are required to pay a recurring subscription fee for accessing the software.
With SaaS, people get access to very powerful, high-performing online tool at a reasonable cost (if we compare with the cost of having the software solution developed from scratch). SaaS companies, on the other hand, gain from the recurring revenue. These companies can roll out additional features whenever they’re ready. But the novice enterprises willing to step into the software domain, SaaS business ideas and their implementation may be difficult to comprehend compared to other business models. Let’s quickly understand how does the SaaS business model work.
SaaS services that are most popular among businesses include:
- CRM or Customer Resource Management: Used by businesses to track sales and manage client information.
- ERP or Enterprise Resource Planning: This SaaS solution is perfect for big organizations looking to efficiently manage resources.
- E-commerce &Web Hosting: Companies’ web presence is handled through remote servers using this type of SaaS apps.
- Human Resources or HR: This SaaS product is used for tracking employee engagement, hiring process, and managing payroll.
- Data Management: This SaaS product is used for protecting business data and is commonly used for data analysis.
- Accounting & Invoicing: As indicated by the name, this SaaS product is used for invoicing and billing services.
- Project Management: Project management becomes easy with SaaS in place. It is used for helping ensure better communication among teammates working on the same projects.
Why Should Your Business Adopt SaaS Business Ideas?
You need SaaS if you want things to work for you in minimum investment. SaaS relieves users from the stress of OS errors and issues that may arise due to new software installation because there is no need to install SaaS solutions at all. You can access all the features of SaaS product without even installing it on your machine.
SaaS is relatively cost-effective than other software solutions sold through other billing models. That is why users are more interested in adopting SaaS. SaaS app developers love it mainly because it’s developed consistently and can run on the infrastructure of the company. On the other hand, businesses love SaaS for its ability to help them generate recurring and predictable revenues.
SaaS Business Stages
There are three stages of SaaS development as discussed below:
Stage 1. Startup: In this stage, a fully functional product is created and marketed to potential customers.
Stage 2. Hypergrowth: This is the stage of enjoying faster growth with the client adopting the product. It includes bandwidth, data expansion, and other technicalities that support the accounts of the user. Many companies fail here because of their inability to efficiently and successfully handle this stage.
Stage 3. Stability: This is the third and highly critical stage of the SaaS process wherein the SaaS model levels out. This is when you make huge profits, acquire more users, and finally enjoy the churn
Adopting SaaS business model instead of standard software installation is highly beneficial to the vendor as well as the customer. A SaaS model is great for your target customers as it helps them reduce their operating costs and enhance product usage flexibility. Customers love SaaS because of the following reasons:
- SaaS solutions help them reduce their costs as they are distributed on subscription bases. As a result, they don’t need to spend money on licensing fees (as is the case with traditional software installation).
- SaaS enables clients to reduce or augment their expenses as per their usage. In addition, since SaaS products are cloud-based, the cost of infrastructure is eliminated for customers.
- Scalability & flexibility –The SaaS model of business allows customers greater flexibility. By basing your product pricing on usage metric, you can make your clients pay more in case they are using the SaaS solution often.
- Customers can grow their business with your software and save themselves from paying huge advance fee upfront for a product that may not even fit their purpose and needs.
- Benefits are instant. Since SaaS tools and solutions are cloud-based, immediate gains may pour in for clients. In a vast majority of cases, it’s as easy as using your email and name for signing up for quickly accessing product functions.
- As SaaS tools are now easily usable across the world, their adoption has also increased significantly. Needless to say, if software provides instant benefits to the users, they’ll not switch to other products unless there is a strong reason for that. Hence, SaaS adoption is quite high today.
- Upgrades are available for free. Most companies cannot afford downtown (even if it is for a few hours). Product upgrades are notorious for causing a significant downtime. SaaS product upgrades usually have a very short maintenance window or they cause no user downtime at all.
How Vendors Can Benefit from SaaS Business Model?
Some of the greatest benefits that SaaS brings along for vendors are discussed below for your quick reference.
- Budget-friendly: Maximum SaaS solutions come at a per month or per user rate, which allows customers and end-users to easily calculate the costs of the software. It reduces any possibility of sales friction caused by IT budget approval.
- Recurring& consistent revenue: Amongst the more compelling benefits associated with SaaS business model is: it opens up a recurring and consistent revenue stream to help businesses control their churn.
- Improvements: SaaS allows easy product update on a continuous basis. As a result, your product is fine-tuned and you can easily increase customer retention while effortlessly attracting new ones during the process.
- A free trial is also available: On-premise products are tedious and colossal. But SaaS gives you a break here too. You can easily extend support to your SaaS product users immediately and on a trial basis. With that, the users may continue using the free trial or may choose to upgrade the product to a paid level as and when required.
- Support and update are easy: As a SaaS mobile app development company, you have full control of the system as well as the environment in which the product has been developed. For example, when you create a product for installing on more than one devices, it will be required to support different operating systems, edge cases, etc. The SaaS products that are browser-related, on the other hand, give you full control of the infrastructure they are being used on.
How Can Your Business Take Maximum Advantage of SaaS?
To ensure you get the maximum benefits of SaaS for your business, you will need to hire dedicated developers with extensive experience in the domain. Some of the key parameters you’ll need to bear in mind as you start looking out for a mobile application development company are discussed here to help you decide better.
- Portfolio – Hire mobile app developers who have a great SaaS project portfolio. If they have already worked on this technology, you may benefit from their expertise beyond imagination. So, explore their portfolio to have a clear picture and a fair idea of what their actual competencies are?
- Experience – When looking for mobile app developers for hire, pay attention to their experience. Make sure you shortlist those who have rich experience in working on SaaS technologies in particular.
- Cost – While cost is no concern for bigger agencies, for startups and smaller firms it matters a lot. Hence, the cost can be a parameter worthy of your consideration if you have a limited budget set aside for this purpose.
- Get Android and iOS apps both – Hire an Android app development company, if you are targeting the masses as Android is the most popular and common OStoday. On the other hand, if your target audience is limited and you are aiming exclusively at iPhone users, you must hire an iPhone app development company for the job.
- Consider full-stack development services – Want to leverage the maximum potential of SaaS? Get full-stack development done.
Some of the top mobile app development companies can be on top of your list if you are looking for a high-security and great performing SaaS product for your business. But don’t just go by the tag of the top mobile app developers. Make sure that you carry out enough research and do your homework well before finally choosing your SaaS solutions developers. Take time to discuss your detailed requirements and expectations with the agencies that you shortlist. You would surely not want some unpleasant surprises later on in the guise of unexpected bugs, safety issues, and performance issues.
The cloud-based SaaS model of business brings along immense business opportunities. It is accepted by a vast community of entrepreneurs and SaaS adoption is expected to rise faster in the years to come, owing to the amazing benefits it offers to the customers, vendors, and businesses alike. Coupled with the competition and demand in the marketplace, all you need to do is pay close attention to the dynamics of the SaaS industry and work towards providing SaaS solutions that are unique and extend value to the customers. And even before you hire a mobile app development company for creating or customizing a SaaS cloud solution for your business, it is highly advisable that you talk to the experts in the domain ahead of time. Adding a cloud-based SaaS solution to your business could be the best decision you would ever make towards taking your business one step or in fact many steps ahead of your competition.