If you’ve ever tried applications like Slack, Google Drive, or Docs, you’ve tried a SaaS (Software as a Service) app. Probably without knowing it’s a SaaS solution at that time.
But the SaaS market is booming today. By the end of 2023, it’s predicted to reach over 380M. SaaS organizations work in over 100 countries—an average company uses 34 SaaS apps daily.
While traditional, on-premise software is quickly going obsolete. Microsoft, Adobe, Salesforce—these are just some of the companies who moved to the SaaS business model a few years ago.
In this guide, we’re discussing why SaaS apps are getting that popular and how they’re different from traditional on-premise software. And what challenges you’re going to face if you decide to a SaaS app.
What Does Software as a Service Mean?
SaaS stands for cloud-based software that you can use via mobile apps or browsers. There’s no need to download, install, or configure SaaS solution on your PC—the development team has already done the job for you. You just need to launch the app via Google Chrome, Opera, or whatever browser you like.
Remember using Gmail or Slack. You don’t install it to your laptop or PC, don’t maintain the infrastructure. You just launch it in your browser and start writing emails or chatting with your colleagues.
With SaaS, developers don’t need to care about data centers, networking, adjusting apps to different OS (Windows, Linux, macOS), and other stuff they generally have to take care of.
Instead, it’s providers like Amazon AWS, which manage all aspects of the application.
Users just connect to and use cloud-based applications over the Internet, focusing on working with the apps and nothing extra.
these days SaaS refers to lots of apps from office software like Microsoft Office 365 to storages like Google Drive or Dropbox.
SaaS is very popular and profitable because it makes software available to any user, in any country, and from any device.
What’s the difference between SaaS and regular apps? After releasing the SaaS product, the software development team continues improving and updating the service.
Amazon, Salesforce, Box, and other software companies have development teams that keep their SaaS solutions up to date—release new versions, apply patches, fix bugs. All this is done to gain more users and stand up to the competition.
Why tech companies choose SaaS:
SaaS startups don’t have to worry about supporting different mobile operating systems and devices, only web browsers, which is less complicated.
SaaS doesn’t require buying and maintaining expensive hardware; it usually operates on paid subscriptions. That means you pay for the functionality you need and can stop paying any time when your business no longer needs the service.
Easy to add new features
With the SaaS model, you present new features, fix bugs, and offer updates much faster than on-premise software. For example, a few years ago, users had to purchase a CD-ROM each time a new Microsoft Office version came out. Or continue using an old suite.
With Saas, new features can be added right away—few times per day if developers want it.
You pay only for the service you need. If your tech requirements change, you just need to update your current subscription plan in most cases.
Easy to use
As I’ve said, users don’t need to install or configure the software. They log in, get a few onboarding tips, and can use the application right away.
Another useful feature is free trials that allow users to get acquainted with your product. After the trial period is over, users can sign up for a paid plan if they want.
While other business models are focused on constantly attracting new customers, which costs money, SaaS goes a different path. Usually, customers pay a monthly fee, just like with Netflix subscriptions.
For businesses, it becomes easier to predict monthly or annual revenue and grow the company knowing how much money you’re going to get.
Tech Difficulties to Build a SaaS Application
Building a commercial SaaS product can be quite challenging. Here are some of the difficulties you may face.
SaaS products are often made for businesses, and thus they’re supposed to store tons of sensitive information. As a software vendor, you must guarantee data privacy to your users.
Bank data, personal information, and customers’ data may leak anytime if your software is not secure. In turn, you may lose your customers and their trust and pay a huge fine.
It’s all about choosing the right tech stack that’ll make your SaaS product scalable. A complex software needs to be customizable at each layer, including:
- List of features
- Page templates
- URL structure
If you’re not a tech expert or an IT company’s CTO, it’s better to work with a dedicated development team. Or even order software consulting services.
For example, just take a look at Salesforce (one of SaaS solutions) tech stack:
Quite a lot of tools, right?
The next step is choosing the right service for cloud software maintenance. AWS SaaS architecture is one of today’s leaders: it takes care of all the hardware and backups all the data in a secure way.
Most SaaS apps integrate with a bunch of tools like Google Maps, PayPal, Jira, cloud storage, Zoom, and lots of more.
For example, Slack developers made over 2,200 apps available in the Slack App Directory, from Atlassian to Zoom.
It’s not that simple to integrate these and other services with a SaaS application. You need qualified developers to do that; plus, it’s important to test all these integrations.
The number of integrations is one of the factors that affect the development cost. Other factors are the number of features and their complexity, custom UI/UX design, the region where you hire developers, and many more.
I’ve asked our Business Analysts to estimate the number of hours it takes to make a Slack-like app with minimum features. It’ll take at least 2632 development hours.
- iOS app — 852 hours
- Android — 852 hours
- Back-end — 768 hours
- Custom UI/UX design (for one platform) — 80 hours
And that’s just design & development, not including planning, testing, DevOps, and maintenance time that can double this number.
As I’ve said, the total cost largely depends on the region where you hire developers. If you’re going to hire a US-based team, it’ll cost you approximately $263,200 (based on $100/h). If you want to cut costs and outsource, it’s ~$131,600 (based on $50/h in Eastern Europe, a popular outsourcing region).
Of course, SaaS apps are cheaper to make and launch compared to traditional on-premise solutions. But that doesn’t mean it costs two bucks.
As you see, there are quite a few reasons to start your tech business from a SaaS application. It not only benefits product owners, offering predicted revenue and development cost savings. SaaS also caters to regular users that don’t need to spend time to figure out how to install and configure the software but can use the product right away.
Yet to create a good product, you need to spend a lot of time on research, planning, solving tech difficulties, and finding a good development team.
Vitaly Kuprenko is a writer for Cleveroad. It’s a web and mobile app development company with headquarters in Ukraine. He enjoys writing about technology and digital marketing.