Essential Guide to SaaS Development: How to Develop an Application For Your Business

September 30, 2022
6
min read
Essential Guide to SaaS Development: How to Develop an Application For Your Business
Grace Lau
by
Grace Lau

Whether it's a booking app or an IVR application, a SaaS application can be a big value-add to your business. Potential benefits include easy scaling and recurring monthly revenue.

But developing software effectively takes a specific set of skills, and they're hard to develop in an existing company if you're not working with software already.

By understanding your needs upfront, you can assess whether or not you're ready to move into software development. In this article, we'll go over the benefits and challenges of SaaS, and what you'll need to get started.

Free to use image sourced from Unsplash

What is SaaS?

A SaaS (“software as a service”) application could be anything from online payments to call forwarding services. In B2C it could be a service that turns an operational challenge like HR or affiliate marketing into a user-friendly service, and in B2C it could be a note taking app like Obsidian or Roam.

SaaS is almost always paid for on a monthly or yearly basis. For companies, this provides an easy line item on the expenses spreadsheet. For individuals, it makes them more valuable customers over their whole "lifetime" with the product, allowing the company to invest in new features more than they could with a one-time purchase.

Benefits of SaaS as a business

The main advantage of SaaS over traditional software is rapid prototyping and iteration: much quicker delivery of the product and future updates than other software development models. Since the providers centrally fix, update, and deploy offerings in the cloud, which lowers software maintenance costs, new features and minor quality-of-life upgrades can go out very quickly.

This makes it simple for developers to set up a website and grow their market share without worrying about reliability: hosting on data warehouses and cloud platforms like AWS means that the app has the same level of security and capability as Amazon.

Scalable cloud hosting and APIs make it simple to integrate third-party-enabled features like a business text messaging service into SaaS apps. This makes it easier to rapidly adapt the product to your user's needs by working with the services they already use.

Free to use image sourced from Unsplash

Challenges of SaaS

One of the main challenges of any SaaS application is finding product-market fit. Software companies spend so much time on their SaaS onboarding experience because they need to demonstrate a perfect fit for their specific customer.

Because SaaS is such a competitive field, companies have to work hard to serve a profitable niche better than anyone. This is only possible by playing the long game: talking to customers regularly to iterate over a number of months or years.

Security

Since you're going to be handling more user data than ever - including personal details, usage analytics, maybe even messages - you must ensure user data privacy. When SaaS app security isn't good enough, data leaks and hacks become a huge risk.

SaaS providers have to put a lot of work into regaining user trust, with excellent incident communication in the days following the event and post-mortem blogs weeks later. And if your security falls foul of regulations like GDPR, you could be hit with a hefty fine on top of that. This is why security measures like end-to-end encryption and crowdsourced pen testing are an essential investment for SaaS companies.

Pricing

Customers love SaaS solutions in part because they're affordable: SaaS companies are lean operations often focused on growing the user base more than monetizing them right away. When it costs nothing to create a signature image file for a SaaS company helping users sign online documents, giving away that service for free can be a way to get new customers in the door before upselling them on other features.

So if you're taking a SaaS app to market, you need to know how much your customers are willing to pay and when. You need to figure out how much service you can afford to give away for free, and how. Spotify is happy to let people listen to music for free as long as they're also hearing ads, but most users are happy to pay monthly to never have to listen to those.

How you should price your service will depend on your niche: B2B can often charge much higher than B2C products, but they're still out to compete on price with expensive legacy solutions.

What you’ll need

If you're trying to sell something in a highly competitive industry like SaaS, you can't sell anything to someone you don't know anything about.

Even if you know product teams could benefit from your design walkthrough tool, you need to understand what specific pain points those customers have that aren't being served already.

When you're entering a competitive market, you need to know what you have that no other company can take from you. If you think you have a killer feature, and you're right, everyone will copy it within a couple of years. A deep knowledge of what your customer does every day, and how you can continue to help them, is one of the few things your competitors can't just imitate.

Continue researching the market and your target market long after you launch, and identify any competitive advantages you may have over competitors.

Think about "user journeys", how people move through the app to achieve a goal, as well as what might obstruct them: slow load times, a lengthy checkout process, etc. Set up workshops where customers can discuss problems with your developers and designers.

By making your app more usable and valuable over the long term, you can improve your SaaS customer lifecycle, which will, in turn, lead to more revenue growth as you monetize your userbase more effectively.

While you're doing your market research, you can build up the resources you'll need to start building. In terms of people, this includes at least one in-house software developer and a designer, who could be freelance, but consider hiring a manager to lead the project who has experience in the software industry. Otherwise, there could be problems when the manager doesn't understand the needs of the software team.

A scalable database

For SaaS products, a database is essential. This is the "source of truth" from which your app will deliver information to users. With its automated sharding capability - which lets it handle a lot of data very quickly - MongoDB can serve as your primary database software because it's flexible and can scale with your business. If you have a sudden influx of new users, you know your database isn't going to struggle with the new traffic.

Free to use image sourced from Unsplash

A secure cloud computing platform

The defining feature of SaaS products is that they're running on a cloud server, and users are just renting access to the information stored on that server. The benefit of this is that you can make an update to the server and every user will see the new version of the app as soon as they load the site or refresh the page.

This means that for the most part, you don't need to worry about users having different versions of the app with different bugs and security flaws.

But with all of your users operating on one server, you need to make sure it can handle the traffic. Your capacity to scale as a business will be affected by the cloud hosting platform you choose. Amazon Web Services (AWS) is the industry standard because it's so scalable and secure. Amazon runs all their services on this platform they built for themselves, and they make it easy for anyone to achieve that quality of infrastructure.

Getting started

A good SaaS product - or new feature - starts with ideation: coming up with new ideas and validating them against users' needs. This will involve talking to potential customers about what they'd like to see from a product like yours, then some creative thinking from the design team who pass their mockups of pages and interfaces onto the software developers who make them real.

Creating a new feature in development is much more expensive and time-consuming than sketching one on a whiteboard. This is why app designers put so much work into iterating their ideas alongside users, to make sure the design is right the first time it goes to the developers. 

Someone from development should be in the room while this design process is going on, as they can mentally "budget" which ideas will take an afternoon to build and which will require weeks of work.

On a large scale, this is why SaaS companies start by releasing a "minimum viable product", which they then build on depending on user feedback. That means they can achieve product-market fit and avoid wasting time building features their target market doesn't really want.

Everything the user sees is the "front-end" of the app, with the "back-end" being what's computed on your cloud server. Once they have the designs, the developers can build those front-ends and "wire" every button and input field to the server's back-end database, which will save information like user logins, users' documents, and workspaces.

                                                                                                  Free to use image sourced from Unsplash

Once this is functional, and you can gate access to paying customers, you're ready to test the app for bugs and then deploy your minimum viable product to your new customers. If you did your audience research and validated your ideas, they're going to love it. And you're in a great place to start making the app's features and pricing even more attractive based on "real-world" usage data.

Adding value to your business with SaaS

It's an exciting time to get into the software market, with SaaS trends like AI and blockchain unlocking new potential for businesses and their customers. And because of SaaS scalability and recurring revenue, can be a great value-add for your business.

About the author:

Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication platform for better and easier team collaboration via the Dialpad voice over internet phone system. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. Grace has also written for domains such as Bizmanualz and UpCity. Here is her LinkedIn.

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