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The Risks, Uncertainties, and Advantages in Developing SaaS Products

September 15, 2021
By Bhaskar Ahuja

Bringing cloud-based Software as a Service (SaaS) products to the market allows data to be accessed from any device with a simple internet connection and a web browser. This model means that software vendors host and maintain the services, databases, and coding in the application. Major services like Google Workspace, Dropbox, Salesforce, GoToMeeting, Spotify, and Cisco WebEx all employ SaaS platforms. In addition to the well-established companies, new startups trying to gain a foothold in the software marketplace, are gravitating towards SaaS as their preferred business model. Yet that adoption is not without pitfalls and challenges to consider, especially when it comes to data insecurity, regulation and compliance, and software integration.

The market for SaaS

The ease of access for SaaS product solutions makes them extremely popular. Gartner predicted a 20 billion dollar jump in related sales revenue from 2019 to 2020 (to $105 billion), in part because the global pandemic forced many companies to pivot to a work at home model. Looking ahead, some companies will mandate employees to return to the office; others will continue to enable a remote workforce, while still others will adapt a hybrid model that makes the accessibility of cloud-based software platforms even more attractive.

According to saasmag.com traditional software vendors, seeing the success of startups that often employ Agile methodology to bring software to market faster, have jumped into SaaS and are marketing those products to their legacy customers. In this context, the future looks bright many might say.

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pxhere.com photo

The steps involved in SaaS product development

            Two protocols or processes support SaaS product development. They are Agile Methodology and DevOps—a set of practices that combines software development with IT operations to shorten the overall development cycle. To bring SaaS products to market sooner rather than later, it’s important to consider and follow these four steps:

  1. Conduct research. Identify and determine the target market, user profiles (who needs this software package), and size up the competition.
  2. Chart a product vision. It’s important to understand product objectives and create a plan to get from point A to point B. That vision plan should entail goals, high-level discussions to ensure product development buy-in and more details on the benefits the SaaS product will provide for end users.
  3. Share and communicate that vision. Use market research and customer feedback to define and refine features of the potential SaaS product. Incorporate that feedback into the planning, development and implementation process.
  4. Create a roadmap to maintain and then improve the product. In a rapidly changing environment, it’s likely that product upgrades will be needed sooner rather than later. If there needs to be a “2.0” version, make sure it incorporates whatever feedback comes back from early adopters and Beta users to improve the software. If the developer doesn’t do that, a competitor most likely will build a “better mousetrap.”

The mistakes to avoid in SaaS development

            As with any type of new product development, there are risks, mistakes, and challenges. They can be especially costly in the competitive software environment, especially for small startups. Here are some pitfalls to avoid:

  • Not having a viable strategy supported by quality research. It’s important to understand the magnitude of the task at hand. “SaaS is doable, but if it was easy everyone’s products would be a success,” says Angle Studios, a UK-based software consulting firm.
  • Not having a defined market for a product before developing it. This sounds simple and obvious, but it’s often an oversight or afterthought. Make sure you are clear about the problems that the software will resolve and that the proposed solutions will make users’ lives easier.
  • Not accurately calculating the size of the marketplace. Don’t lose sight of the market size for the product. Is it worth all the upfront development and testing expense? Does the ROI make sense? Is it an original product distinct from others in the marketplace? Are the developers keeping up with market changes that may mean a revision is in order? Can the product be scaled if necessary?

Technical hurdles to consider

            SaaS development goes beyond visioning and marketing. There are technical hurdles to consider too. While most can be overcome, they should still be a major consideration in the product development discussions. For example:

  • Date privacy issues. The fear of Cloud-based SaaS data compromises can be overwhelming to address. For example, what happens when a hacker accesses and collects personal and financial information? What security measures are put in place to minimize this risk, and how is activity monitored to provide warning signs of potential invasions? Strong built-in security measures and firewalls can become a marketing asset in selling a new software product. Encryption systems, solid authentication security procedures and multiple data backups should be part of the mix.
  • Regulations and compliance. It may be difficult to comply with government data protection regulations for certain business sectors when that critical information is stored elsewhere and under another party’s control—in this case the service provider’s data center. (Add an explanatory sentence and/or an example here.)
  • Data mobility. If a startup goes under or if the user wants to transfer to another cloud-based software provider, can their data be moved easily? Making that transition a less cumbersome task upfront can entice an end user to take more of a flyer when opting to go with a smaller startup.
  • Low performance. Browser-based applications running on a remote data center platform mean that software users should have a fast, reliable internet service in place. Those companies should also have tools to monitor how their SaaS apps are performing over time. Also, integrating external SaaS apps with existing in-house software programs can be a challenge. These are issues that SaaS developers need to address and keep top of mind.

Why SaaS works for many users

SaaS solutions can be economical for small to medium size companies that want to avoid loading software on every computer, choosing instead to pay a licensing fee perhaps to secure that product online. There are no upfront hardware costs and flexible payment methods (including pay-as-you-go) make it attractive for smaller firms. Software maintenance and upgrades become someone else’s problem. As a business grows, upgrades to an existing SaaS subscription makes that part of scaling up easier. Software upgrades are relatively trouble-free, removing that burden from the in-house IT department. Since data is stored in the Cloud and offsite, they can be reclaimed after any type of disaster that would wipe out onsite servers. SaaS may be the best option for bringing new products to market today. Just be aware of the technical, development, and marketing considerations upfront.

About the Author:

Bhaskar Ahuja is a portfolio and project management with corporate and entrepreneurial experience. He holds a Master of Science in Information Systems from Stevens Institute of Technology. For more information, please contact ahujabhaskar999@gmail.com.

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