This document provides guidance on key considerations for building a successful Software as a Service (SaaS) product. It discusses what SaaS is, examples of popular SaaS tools, and differences between SaaS and other cloud models like PaaS and IaaS. The document then outlines potential methods for coming up with a viable SaaS idea, common reasons why SaaS products fail and how to avoid them, and an 11-point checklist to ensure SaaS success. Key recommendations include conducting market research, validating product-market fit with an MVP, prioritizing effective marketing, responding quickly to feedback, and focusing on customer experience and support.

1. Software as a Service — Things to Know
Before you Build a SaaS Product
You do not need to buy, install, and upgrade software these days. The time when
organizations used to buy software deployed on compact disks is over. Some even
call it software trash now. Cloud computing, driven digital transformation has
changed the facet of software once and for all. This revolutionary model is called
— SaaS, the new buzzword of the tech town.
SaaS, an acronym for software as a service, is a public cloud service model where
third-party providers launch the software on a subscription basis over the internet.
It does not work offline, as is the case for traditional software and eliminates the
burden of creating and managing an in-house software.

2. Salesforce’s Customer Relationship Management (CRM) software, Slack, ClickUp,
Trello are some popular SaaS examples. The remote accessibility option offered by
SaaS products is its USP, which is the reason why startups and enterprises are
readily investing in building SaaS products that dominate the market.
Almost half of IT industry leaders are planning to make SaaS
the go-to option to build a digital ecosystem — 49.2% of
organizations are planning to invest in SaaS as part of their
digital transformation initiative.— Digital Transformation 2020
Report, Net Solutions

3. However, the process of setting your footprint with SaaS is a strategic journey to
undertake.
Here’s your ultimate guide to building and growing your SaaS business and
sustaining its value in the times to come.

4. What is the SaaS?
Understanding Software as a
Service
SaaS is simply about renting software from third-party providers on a pay-as-you-
go basis, i.e., you only pay for what you use. Here almost everything is managed by
the cloud SaaS provider. The anytime and anywhere availability of the software
with a working internet connection is its unique selling point.
Here is a glimpse into what all you will be managing for organizations.

6. Implementing SaaS brings economic advantages as your IT department only
manages the users at its end while facilitating a single sign-on (SSO) option for easy
access.
Questions to Ask Before
Venturing Into the SaaS
Business
Here are some frequently asked questions about SaaS.
1. What is SaaS Business Model?
If your organization bases its source of revenues from a SaaS-based product, you
are running on a SaaS business model. Startups and enterprises should be investing
in the SaaS business model, as nearly 73% of companies agree that they will be
adopting SaaS applications for running business operations.
And, now that the impact of COVID-19 on businesses brings the challenge to access
in-house software, the SaaS adoption rates are likely to increase. This is an ideal
opportunity to disrupt the market with an innovative SaaS solution.

7. 2. What is the Difference between
On-Premise and SaaS software?
It may take years to build an in-house software that works in alliance with a
businesses’ needs, and by the time it gets released, new requirements pop-up. This
means that the product needs iterations.
With SaaS implementation, you handle the burden of creating and managing the
software, which offers economies of scale for any organization.
Here is a table that summarises all the major differences.
On-Premise Software SaaS Software
1. Can run offline It is cloud-based, thus requires an internet
connection to work
2.Needs to be maintained by the
organization
The third-party SaaS product provider
maintains the application
3. One-time licensing cost A subscription-based application model
where you pay-as-you-go, i.e., you only
pay for what you use on a monthly basis or
even annual
4. It is highly secure Security might be an issue due to its online
deployment

8. 3. What is Multitenant
Architecture?
The majority of the SaaS businesses work on the multitenant architecture, i.e., a
single software as a service architecture of an application that is owned by you and
will be made publicly available to be used by multiple people (tenants). In short, it
is a single application with a universal UI and UX that is used by everyone that
subscribes to it.
4. What is Micro SaaS?
Micro SaaS is a software as a service model where an individual or a small team
works and launches a product that involves lower investments, low risk, and is
location-independent. These products target a narrower software as a service
market, require no funding, have a predictable revenue stream, and a small user
base.
5. What are the Two Types of
SaaS?
There are mainly two types of SaaS categories, which include:
 Vertical SaaS: If you create software
that answers a specific industry’s
needs, it is a vertical SaaS product. For

9. example, creating software for
media, food & beverages, healthcare,
or the sports industry.
 Horizontal SaaS: If your software
focuses on the operational category,
it is called horizontal SaaS. In simple
words, the software is generic for all
industries. Here software as a service
example could be a product for
marketing, sales, R&D, or even HR
operational departments.
6. What are the Different
Categories of SaaS Products?
There are mainly three categories for SaaS products, which include:
 Packaged SaaS: These are SaaS
products that help manage a
particular process in an
organizational setup. Any CRM SaaS
product is an example of a Packaged
SaaS product.
 Collaborative SaaS: These are SaaS
products that help manage

10. collaboration and communication
across an organization. These types of
SaaS products are quite popular now
as remote work is gaining traction.
Zoom and Trello are examples of
collaborative SaaS.
 Technical SaaS: These are SaaS
products that act as tools to improve
technical processes within an
organization. These are products that
generally prove helpful in the agile
development journey.
7. What is the Difference Between
SaaS, PaaS, and IaaS?
Before investing in building a SaaS business, it becomes imperative to understand
how it is different from PaaS and IaaS. IaaS is Infrastructure as a Service where an
organization rents a small amount of hardware and software to host the
application’s virtual machine. Here the organization’s virtual machine is simply
moved to the cloud.

11. In the case of PaaS, the cloud provider manages the system software, thus helping
mitigate the IT department’s burden. The organization only has to take care of the
application code and its deployment.
In the case of SaaS, organizations simply rent an application that the provider
manages completely. An organization’s IT department only has to ensure that an
integrated sign-in process is facilitated across the organization.
Read about an in-depth comparison between IaaS vs PaaS vs SaaS here.
Now that we know what SaaS is and other related facts, lets’ see how to finalize a
SaaS idea.
How to Come up with a SaaS
Idea?
With the increase in SaaS churn rates, it is taxing to make an impression and gain
early adopters. According to a McKinsey report, SaaS vendors must show an annual
growth rate of more than 20% to survive. If that is the case, a robust and innovative
idea is a must to make a difference.
One should be able to come up with a new idea or feature set. To start with — your
idea should be well thought off, should have a validated proof of concept, and
should solve a real problem.

12. Here are some methods enlisted by Tom Zaragoza, founder at Vocalmatic, that can
help you come up with an idea people would pay for.
1. The Job Search Method
Enter the URL for a popular job search website on the web browser such as Indeed
and enter an industry name in the search box. For example, if you are interested in
the automobile industry, enter the keyword “automobiles” in the search bar.
This is one of the results that appear under the job search for automobiles for
Mexico region – Auto Parts Delivery Driver.

13. Now when you click further, you can see the job description. Here’s one of the
responsibilities that the above job demands.

14. Here you need to emphasize on the relevance of keywords. Create long term
keywords that combine the “job industry” with “job description that can be
automated.”
For instance, if you focus on the job description above, and combine “Automobile”
and “Delivery Documentation,” and add a suffix “software” to it, you get a long-
tail keyword, i.e., “Automobile Delivery Documentation software.”
Google it to find the relevance of this long-tail keyword. If there are SaaS products
based on the idea, repeat the process until you find a never-tried-before idea.
2. The App Store Method
This is a simple method to find what other SaaS service providers lack that you can
fix and improve on. Visit an app store. For instance, you are interested in building
an eCommerce SaaS solution — Magento App Store could be a good starting point
for research.
Likewise, you can also research through Apple and Google apps stores to look for
relevant apps related to industries that interest you.
Look out for popular apps as well as apps with one-star reviews.
Popular apps will help you see what people are liking and what is currently working
in the market.
“One Star” review apps will help you analyze what other market players lack that

15. your SaaS product could address. These types of reviews are mostly long sentences
where people enlist the problems they are facing.
3. The What-They’re-Using-Excel-
For Method
This process starts with interviewing people working across industries and your
workplace. Engage in conversations across social media channels, create surveys
that can be spread across your organization, and can be sent over the email.
The questions should be framed around — “What do you use spreadsheets for?”
If they mention the tasks that are managed through spreadsheets, you are in for
luck. You can build a SaaS solution for them that automates and eliminates the
burden to manage spreadsheets. This could be your innovative idea.
As an add-on, here are the top trends that should inspire your SaaS application
development idea.
 E-learning and remote work tools
 Artificial Intelligence and machine
learning
 Focus on creating vertical-specific
SaaS Products
 Developing and creating Micro-SaaS
products

16.  Embedding chatbots for on the go
support
Reasons for SaaS Failure and
How to Avoid Them
The demand for SaaS is high, which means that many small-scale and large-scale
businesses are investing in building Software as a Service (SaaS) solution. However,
most of them are failing to create a lasting impression.
Anestimated92%ofSaaScompaniesfailwithin3yearsdespitegrowthandfunding.— Lighter
Capital
Several bricks go into building a robust wall. The same is the case with a SaaS
product. If you do not work cautiously on building the foundation, the wall is likely
to fall.
Here are some reasons why SaaS products fail and the corresponding solutions to
overcome the challenges at hand.

18. 1. Missing Product-Market Fit
A product-market fit is achieved when you create a product that solves the
problems of your target audience. If there is a need and you manage to address it,
you have achieved a product-market fit. In such a case, your customers become
your marketers, who endorse your product through word of mouth.
But, if you fail to address the problems, and develop a SaaS solution that is not
pragmatic, failure is evident.
Solution
 Market Research. Before coming up
with a SaaS idea, understand the
needs and problems of your target
audience. Brainstorm around ideas
and create a list that seems
promising.
 Analyze existing SaaS businesses in
the market to see if they already have
a product based on your shortlisted
ideas. Also, analyze where the
existing solutions lack so that you can
offer a better experience.

19.  For new ideas, create a proof of
concept to check the technical
feasibility of the idea.
 Create discussion groups, a
combination of development teams,
stakeholders, and limited test users
to validate the need for a specific
SaaS product in the market.
 Finalize the idea that would make a
difference after running a vote across
the discussion groups.
2. Great Product, No Marketing
An approach that most of the SaaS businesses follow — Develop a product, agile
test it and launch the product in the market, announce it on Twitter or a few other
social media channels, and wait for it to be the next big thing in the market.
It does not work that way. Instead, the idea should be to adopt the product mindset
over a project mindset. Marketing is equally important because, without effective
marketing initiatives, even a great product is likely to go unnoticed.

20. Solution
 Create a SaaS marketing plan by
looping in marketing, sales, customer
service reps.
 Focus on SEO wherever you are using
content. The better you rank on
Google, the better the chances of
conversions. You can also spend on
Google AdWords for gathering a
better reach.
 Publicize your SaaS offering through
social media posts, email campaigns,
blog posts, guest posts, etc. You can
also try influencer marketing, which
works wonders nowadays.
 To gather eyeballs on your product,
offer free trials to your customers.
Urge them to try the product and
receive valuable results. Your pitch
should be talking about how your
product will make a difference in the
user’s life.

21.  Stick to low-price, low-complexity
rule. These are the two parameters
that customers will judge you for.
 Maintain a healthy relationship with
the early adopters. If they stick to
your product initially, send them a
gift, something that Freshbooks does.
This SaaS company sends a cake to its
loyal customers to maintain an
ongoing relationship.
3. Inability to Respond to Change
The inability to showcase agility skills when responding to change leads to product
failures. For instance, your SaaS product was launched a month ago, and you
receive feedback that you fail to respond and iterate through, failure is the result.
If you respond to feedback but spend a lot of time to iterate through the changes,
failure is evident again. In short, you need to showcase agility skills to stay relevant
and valuable.

22. Solution
 Launch an MVP before moving to the
full-scale product. The minimal viable
product that focuses on core
functionalities should be the focus.
This can be a good starting point for
gathering loyal customers and honest
feedback to start revisions.
 Emphasize on building your SaaS
product by following
the microservices architecture, i.e.,
smaller modules of the bigger
application that are loosely coupled.
It makes it easier to iterate through
the suggested changes as the change
to a particular module does not affect
the other modules’ functionality.
Thus, fewer downtimes.
 Maintain a lower amount of cruft in
the code, i.e., the unwanted parts of
the code. The lower the cruft, the
quicker it is to identify and fix bugs.

23. Most importantly, give it time. Overnight success is a myth; do not fall for it.
Instead, drive constant efforts towards — Launch. Market. Gather
Feedback. Iterate.
11 Point Checklist to Ensure
SaaS Success
To succeed in your SaaS triggered digital transformation initiative, there are a few
best practices that align well with the changing times and needs.
Here is a glimpse into some of them:
 The focus should be to create a proof
of concept followed by a prototype
and then an MVP.
 Create interactive advisory videos for
your customers to help them
understand the working of the UI and
other noteworthy software as a
service benefits.
 Offer distinctive and affordable
pricing models that are better than
your competitors. These offerings
should be easy to understand, as

24. complex pricing models can put off
your potential customers.
 Work on enhancing the customer
experience across touchpoints to
eliminate churn rate. These days the
end-to-end customer experience of
most of the SaaS products seems
disconnected. You can make a
difference here by offering seamless
sign-ups and intuitive and responsive
UX.
 Deploy data analytics to analyze the
reasons behind churn rates. These
results can also help to identify SaaS
product shortcomings so that you can
improve on them.
 Offer valuable and on-time customer
support as it acts as a key ingredient
to SaaS vendor success.
 Offer regular and timely updates and
bug fixtures to stay one step ahead of
the competition.
 Ensure that the SaaS product can
operate efficiently with lower
bandwidths so that it can run

25. uninterruptedly with low-speed
internet connectivity.
 Look for strategic partnerships to
expand your user base and reach
across the globe. This can help gain
scaling advantages for your SaaS
product, which can act as a cash cow.
 Analyze your product portfolio from
time to time. Make informed
decisions by filtering out product
offerings and services that offer little
to no value and are showing no signs
of growth. According to McKinsey,
SaaS vendors that manage their
portfolios achieve enterprise-value-
to-revenue multiples twice those of
passive portfolio managers.
 Offer integration capability for your
SaaS product as it can help you offer
an omnichannel experience to your
target customers.

26. Conclusion
SaaS is a software as a service, public cloud model that delivers software through
the internet on a subscription basis. The evolution of SaaS through the years is
noteworthy. The subscription-based SaaS model is gaining traction, and the current
crisis just brings the tailwinds for the software industry.
A report by Gartner predicts that SaaS revenue will grow to nearly $143.7 billion by
2022. This brings the opportunity to rely on SaaS business models to source
revenue streams when most industries are going the SaaS way.
This writeup covers is a comprehensive guide on SaaS that answers everything you
should know before venturing into this as a service business.
In the words of Drew Houston, Co-founder, Dropbox — Learn Early, learn Often!
Source - https://www.netsolutions.com/insights/software-as-a-service/