Everything You Need to Know About SaaS Software Development

What is SaaS (Software as a Service) Platform?

The term “SaaS application development” refers to the process of developing SaaS apps, i.e., Software-as-a-Service apps. Unlike traditional applications that are installed on local computers or servers, SaaS apps are hosted by third-party cloud providers.

Users can access these third-party cloud servers and the SaaS apps stored on them, anytime they want over the internet. This eliminates the need for end-usersx to manually download, install, or update the software and any infrastructure that’s required to host the software.

The cloud-based SaaS distributions models have also made the lives of business leaders and software developers easier. To understand how, you need to have a basic idea of how the SaaS application development best practices came to be:

• By the late 1980s, the complexity and requirements of software applications had increased drastically. Businesses that were running thousands of systems simultaneously struggled to manage all the applications. They were also rapidly using up all of their storage hardware.
• These difficulties lead software development companies to consider a different solution: hosting their data on third-party servers and computers, not in-house IT infrastructure.
• In the late 80s, the expansion of the Internet had made this idea feasible. Businesses started storing their data and enterprise applications off-site and then accessing it via the Internet.
• The professionals who provided the third-party hosting services were known as Application Service Providers (ASPs).
• Centralized computing, facilitated by professional ASPs enabled businesses to cut costs and avoid hefty investments in IT infrastructure and specialized workforces.
• By the early 2000s, some of the most widely used enterprise applications (CRMs, payroll management tools accounting tools, etc.) in the world were stored on third-party servers.
• However, ASPs failed to fulfill many promises that they made to businesses. They couldn’t guarantee low costs, easy deployment, or seamless updates.
• The 2000s was also the era of virtualization technologies. Any software development company could now create virtual instances of servers, operating systems, and applications and then run all of them on a single physical server.
• Hence, the inefficient ASPs were soon replaced by SaaS providers who were quick to adapt virtualization technologies. On top of that, SaaS providers didn’t just offer to host and manage third-party apps. They developed and licensed their own apps and then offered them to end-users on a subscription basis.

Examples of SaaS Web Applications

Concur was the world’s first dedicated SaaS application development company. It went public in 1998 with a meager 20-million market cap and focused specifically on developing software solutions that could be accessed via the Internet. In 2014, Concur was sold for $8.3 billion.

Today, most companies either have their own SaaS apps or are in the process of migrating their existing, on-premises software to SaaS. In 2022, 50% of all the revenue generated by the global software market came from SaaS apps. In 2023, that figure is expected to reach $590+ billion.

Why is this such a lucrative market?  Well, take Adobe Photoshop as an example.

• Years ago, this photo-editing software was sold to users for a one-time price. Every year, users had to buy a one-time product license to gain access to a specific version of Adobe Photoshop.
• Now, if you try to buy the latest version of the software on the Adobe website, you’ll see that’s no longer how the company sells this product.
• Instead of asking users to pay high up-front fees for a one-time purchase license, Adobe now asks users to sign-up for a yearly/monthly subscription to their SaaS called “Adobe Creative Cloud.”
• For just $9.99 a month, users can get monthly access to basic features in the latest version of the Adobe Photoshop software.
• This cloud-based and SaaS-centric subscription model is extremely user-friendly as users can cancel their subscription anytime.
• It’s also better for Adobe because they can add new functionalities to their products more swiftly. They can constantly roll out updates for their Adobe Creative Cloud SaaS and charge users extra fees accordingly.

Tens of millions of business leaders across the world are doing the same as Adobe did. They are transforming their old-school applications into customized SaaS solutions and making them easily accessible to their target audiences.

Companies that don’t wish to invest huge sums of money to develop their own, indoor IT infrastructure or workforces are also doing the same. They rely on SaaS providers to host, deploy, and maintain their apps remotely.

Benefits of SaaS (Software as a Service) Application Development

If you’re considering switching to the SaaS distributions model and building custom SaaS applications for your users, here are the direct benefits that you can expect:

#1. Easy to Deploy

SaaS apps are very easy to deploy. That’s because instead of hosting these apps on your own servers, you’ll be hosting them on cloud-based platforms like Amazon Web Services (AWS) or Google Cloud Platform (GCP). This is a cheaper, more scalable option. Plus, your selected SaaS provider will remotely perform necessary bug fixes and app updates in the cloud. Post-deployment, your software maintenance costs will also be easier to manage.

#2. Scalability

No matter how many users you might add to your Cloud, your SaaS app’s performance will remain undisturbed. Your cloud provider will manage the scalability of your SaaS. If your SaaS has APIs, adding newer features to it via the cloud will also be easier. On the user end, users can instantly access these features as soon as they’re implemented by paying extra or by switching to a better subscription plan.

#3. No Hardware Requirements

Your SaaS provider will use advanced hardware and high-tech virtualization software to host, secure, and maintain your software. You don’t need to perform any type of manual maintenance or invest in any hardware.

The same goes for end-users. You’ll need a Windows PC with a processor of at least 1 GHz to use Microsoft Excel. However, to use a SaaS platform like Google Sheets, you only need a smartphone.

#4. Guaranteed Security

SaaS database providers have to abide by SSL and TLS encryption and security protocols. That is why the SaaS model is deemed to be inherently safe. All company data, user communications, etc., are encrypted by the cloud hosting provider.

#5. Service Level Agreement

The ‘Service Level Agreement’ is a legal paper that compels cloud hosting and SaaS providers to guarantee the safety of your business data and the functionality of your SaaS products. At no point will your SaaS products fail, disappear from the cloud, or become victims of data leaks. If anything like this happens, you can legally ask your cloud hosting or SaaS provider for refunds.

#6. Automatic Updates

Your SaaS providers automatically will update your app/s and deploy new patches of code whenever necessary. This will free up the time and resources of your in-house IT staff.

#7. Ability to Enter a Growing Market

In the post-pandemic world, pretty much every company uses multiple SaaS products to work and collaborate remotely. According to recent industry estimates, 85% of all enterprise apps used by businesses will be SaaS-based by 2025.

The more businesses and individual users that want to switch to user-friendly SaaS solutions, the more chances you have to sell subscriptions.

How to Develop A SaaS Application

Step 1. Decide What Type of SaaS App You Want to Build

There are two types of SaaS applications that companies develop: Business-to-Business (B2B) SaaS applications and Business-to-Consumer SaaS applications. In the B2B sphere, the most common types of SaaS apps that are developed by businesses, include:

• Enterprise resource planning (ERP) systems like Oracle, SAP S/4HANA Cloud, and Cloud ERP.
• Project management tools like Jira and Trello.
• Collaboration tools like Google Workspace, Zoom, and Slack.
• Marketing software like Zendesk and Salesforce
• Content management systems (CMS) like WordPress and Drupal

The most common types of B2C SaaS applications include:

• Streaming services like Spotify and Netflix
• E-learning apps like Duolingo and Coursera
• Gaming platforms like Steam and Epic Games
• Social media management tools like Hootsuite and Buffer
• Cloud storage services like Dropbox and Google Drive

Step 2. Select the Right Cloud Service Provider

Once you decide what type of SaaS app you want to develop, you’ll have to pick a cloud service provider. Ideally, you should opt for a big-brand cloud provider like AWS or Azure. That’s because these providers offer tools, features, and services that can adapt to your business needs as it grows and scales.

For example, Amazon Web Services offers both up and down-scalability options to users. If your business is growing, you can upscale your cloud environment by paying for extra features. If your business is shrinking, you can down-scale your cloud environment by downgrading to a cheaper package. This “pay-as-you-go” business model also comes with guarantees of security.

All leading cloud service providers, including AWS, offer a variety of high-quality security tools (firewalls, public access settings, etc.) that can restrict public access to certain sections of your SaaS app, eliminate unnecessary traffic, and secure your public/private data repositories.

Step 3. Define Your Integration Strategy

If you want your SaaS application to cover many functionalities and offer a plethora of solutions to all users, you cannot code everything from the scratch. You’ll have to integrate existing services from external providers, into your SaaS to enhance its overall functionality.

For example, many apps are integrated with Google Maps, Facebook, and PayPal. These integrations can make your SaaS app instantly more desirable to people who already use these popular services. So, before the development process begins:

• Identify the third-party services that will add the most value to your users.
• Research the third-party providers behind the services; learn about their terms of service.
• Decide which features/functionalities you want to integrate, the security measures you will employ to protect user data, and the data you are comfortable exchanging between your app and the external provider/s.
• Obtain approval from the third-party provider.

Now, you can develop your SaaS app with the integrations in mind.

Step 4. Conduct Competitor and Market Analysis

This is a standard procedure that is carried out before any product development process. SaaS applications are no different. You will have to identify your target users, understand their pain points, and then come up with SaaS solutions that address their problems. You will also have to assess your competitors and make sure that your plans are different and better than theirs.

Step 5. Idea Testing

By now, you will have a basic idea of what functions your SaaS app will serve. Test this idea by interviewing your potential audience. Even better, make a prototype of your SaaS solution and ask your users to try it. Do not end this stage until the people you interview say that they are ready for the SaaS solutions you’re developing.

 Step 6. Monetization Model

Most SaaS app developers opt for the subscription-based model. If you’re the same, make sure that whatever it is you are offering, customers are willing to pay for it regularly. Or else, covering product development costs, administrative fees, etc., would be impossible.

That is why, it is always better for SaaS developers to have a working budget even three to four months after the app’s launch. Expect your SaaS app to start paying for itself once it acquires more users.

Step 7. Define the Tech Stack

Select the appropriate technology stack (all the technologies that you want to be used in the development process) for your SaaS application. This includes choosing:

• The back-end frameworks and libraries
• The front-end frameworks and libraries
• Databases, servers
• Infrastructure configuration.
• Programming languages

Your development team will guide you through this process.

Step 8. Assemble a Development Team

If you do not have an in-house IT/development team, create a reliable team of SaaS app developers and designers. Even better, outsource the task to a reputable SaaS application development company.

These companies specialize in building SaaS applications using Agile frameworks and development methodologies. They can dissect the development process into smaller, easily achievable tasks and then maintain steady progress throughout the development timeline.

Step 9. MVP Development

Now, it is time to create an initial version of your dream SaaS app. In other words, it’s time to create a Minimum Viable Product (MVP) version of your app. Ask your development team to swiftly develop the SaaS app. Only include the core functionalities of your app so that the product’s hypothesis can be tested by target users and potential investors. 

Step 10. Testing and Iterating

Once your MVP is reviewed and approved by all project stakeholders, start refining it. Use the feedback from users to make apt modifications to your SaaS app. Make sure any previous complaints about the app are not present in the next iteration. 

Step 11. Deploy, Launch, and Maintain

Copying your app’s code and files to your chosen cloud servers. Once your app is deployed and launched, you will need to monitor its performance. Your cloud provider will help you in this process. After that, a new chapter will begin for your SaaS app.

You will have to promote the app, find new users, and have your development team constantly  detect and fix bugs. If your app is successful, you will also need a definitive plan for scaling it.

Final Take

The SaaS distribution model provides incredible value for money because businesses with short budgets can develop SaaS apps. The upside (the number of subscriptions your app sells) for them is technically unlimited as any user with an Internet connection can use/sign-up for SaaS apps, regardless of their location. Once a SaaS app takes off and creates a stable source of revenue from subscription payments, it can be refined regularly and marketed towards even more potential subscribers!