The popularity of SaaS applications has been climbing through the roof over the past few years. Global digitalization and the development of cloud-computing have spurred companies all over the world to rethink the way they handle their business processes and encouraged them to start integrating more effective technologies into their workflows.
It is, therefore, not surprising that the SaaS industry is one of the fastest-growing. According to Financesonline, the industry will reach the $623 billion mark by 2023. Even the COVID pandemic outbreak hasn’t dampened the market. In fact, after the term ‘remote work’ became the new normal for 64% of companies, the demand for SaaS software increased even more.
In this blog post, we’ll detail how to design a saas application, the main reasons for doing so, and how you can get started today.
SaaS architecture overview
Before we proceed with the software development process itself, let’s briefly review the concept of SaaS architecture design. SaaS stands for Software-as-a-Service, and it is a cloud-based deployment model which implies that developers instead of selling digital downloads host products on servers and allow users access them over the internet. SaaS software can be accessed via web browser or a mobile app, with servers located anywhere in the world.
Based on the business goal a product aims to achieve, it can follow either horizontal or vertical SaaS application architecture.
Horizontal SaaS solutions focus on a software category (e.g. accounting or marketing) rather than a niche. Horizontal architecture is best suited to those products that aim to cover the largest market share possible.
Horizontal |
|
|---|---|
Business model |
A product that offers the same set of features for a vast variety of industries |
Target market size |
Large |
Competition |
The high number of market players and high entry level for new players |
Scalability opportunities |
Moderate |
Vertical SaaS products don’t try to play a ‘one-size-fits-all’ game. They focus on a specific niche, not the broad category. Vertical SaaS products have often been developed by people with specific expertise who want to address a particular problem in a particular field (e.g. Fintech or Healthcare, for example).
Vertical |
|
|---|---|
Business model |
A product that targets specific niche needs |
Target market size |
Relatively small |
Competition |
Relatively low due to a fewer number of market players |
Scalability opportunities |
High |
We’ve gone through the main points of the SaaS application design concept, let’s now see what the actual applications of this type of software are.
Main types of SaaS solutions
- CRMs— Customer relation management systems allow businesses to automate their relationships with clients, respond to their questions and provide timely assistance. Examples: Hubspot CRM, Salesforce, Zendesk sell, Zoho CRM.
- ERPs — Enterprise resource planning systems are used to help manage business processes across different departments within an organization: accounting, supply chain, procurement, risk management, etc. Examples: SAP, Oracle, Syspro, Acumatica.
- E-commerce — These systems include all the functionality needed to successfully run an online store: shopping cart, payment gateway, CRM, stock management tools, front-end interface instruments, etc. Examples: Shopify, WooCommerce, BigCommerce, Magento.
- Billing/payment gateways — Solutions that allow businesses to accept payments through different channels, such as credit cards, mobile wallets, reward programs, bank transfers, etc. Examples: Stripe, Braintree, Recurly, 2Checkout.
- Collaboration/ Communication tools — The simplest SaaS solutions may only have file-sharing or messaging functionality, while complex systems cover a wide range of features needed to effectively facilitate projects: document management, team communication tools, configurable dashboards, KPI diagrams, task tracking, and notifications. Examples: Slack, Trello, Typeform, Proofhub.
- Accounting — Systems that help track accounts and manage finances: invoicing, MRR monitoring, cash-flow reports, payment integrations, etc. Examples: Xero, QuickBooks Online, FreshBooks, Softledger.
Why Software as a Service architecture is so popular among startups
Adopting a SaaS architecture design approach brings lots of advantages to both software developers and end-users of the SaaS products. The key benefits are as follows.
For SaaS developers:
- Long-lasting revenue model — SaaS software distribution model spares users the need to break the bank in order to develop and adopt custom-made solutions within their companies. This is the key benefit that makes users stick with well-designed SaaS apps for a longer period, compared to other types of software.
- Large customer database — the low cost of entry significantly increases the potential customer base, allowing developers to target more people with their product.
- No large up-front costs for potential users — affordable prices and flexible subscription options make SaaS software design attractive for potential users.
For regular users:
- Scalability — cloud-based SaaS software offers vast scalability options depending on current needs. Users decide whether they need more or less features and choose their subscription plan accordingly.
- Simplicity of adoption — companies don’t need to have large IT departments in place to start using SaaS software. Everything can be done with just a few clicks.
- Cost-effectiveness — thanks to a wide range of pricing options, SaaS solutions can fit budgets of any size. Also, with SaaS software, users don’t need to invest in maintenance, software updates, etc.
How to design a SaaS application: 5 Tips to help you get started
1. Decide on UVP and key features of your future product
UVP — or Unique Value Proposition — is the reason you are giving prospective clients to buy from you. It should briefly but precisely describe your SaaS product: what it is about, what its features are, and what makes you stand out from the competition.
Customers don’t buy products, they buy solutions. Your task is to identify what prospective customer pain points your product is going to solve. To make it all a bit easier, here are four primary goals that any SaaS software aims to achieve (for their users):
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1Increase revenue (CRM, as an example);
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2Reduce expenses (ERPs, E-commerce systems);
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3Win the competition (E-commerce, collaboration tools);
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4Keep the company out of trouble(Billing, accounting SaaS).
By targeting one of these goals, you will be able to wisely plan design for SaaS application, shape the value of your product and come up with a comprehensive list of features that fits your particular category.
2. Do market research and figure out who your competitors are
Even if you have a brilliant startup idea, similar solutions may already exist. Alternatively, you may develop a SaaS application design that doesn’t fit the market you want to penetrate. In order to avoid any surprises in the middle of the development process, we recommend doing your research first.
In standard cases, you want your research to be done across three main areas:
- Your SaaS segment — estimate the market share and overall state (growing/shrinking). Understand what the latest trends and predictions are.
- Market audience — since you are implementing a SaaS software model, your customers are companies (SMEs, large businesses). Study your potential client base and get familiar with the niche you want to step into.
- Competition — understand who the market players are and how your future product compares to theirs. Technical information, financial data and marketing information can help you paint a better picture of your competitors.
3. Choose your monetization strategy
Defining the appropriate monetization model from day one will help you to 1) frame the SaaS application design requirements; 2) better navigate the development process itself; and 3) figure out which features are critical in generating profit, and which can be put aside to be added in the future updates.
Understanding your product monetization structure is important in cases where development budgets are limited and changing or adjusting strategy on the go would cause a failure by default. SaaS products normally follow one of the three monetization strategies:
- Freemium model. Users are not required to pay anything to start using your product. They get a limited set of free features which can be increased for an additional fee.
- Subscription. In order to use a product, users have to make recurring payments. The billing frequency can be monthly, quarterly, or annually, depending on the subscription packages available.
- Paid app. A user makes a one-time payment to start using an app. After purchasing the software, they get full access to all the product contents and features.
4. Pick a SaaS development team
Irregardless of the type of software you want to create, when it comes to project facilitation, you will most likely be faced with two options — building a software in-house or outsourcing the work.
- In-house. You create software with the help of your own on-site team within your company. In this case, you will have to recruit developers (if you don’t have a team already), and take care of salaries, taxes, rental expenses, etc. The in-house approach is best suited to large organizations that want to have full control over a software development process.
- Outsource. You create a product with the help of a third-party team — an outsourcing contractor. With an outsourcing model, you also have two options — to look for a team on-shore (in the local market) or off-shore (look abroad). Since the main reason for outsourcing is cost reduction, we recommend that you consider foreign markets first. If we take software development rates of EU-based software architects, these are normally 2-3 times lower compared to those of US-based developers.
5. Create an MVP
MVP — a Minimum Viable Product — is a basic version of a product or a prototype that includes only the key components of your software (i.e. those features that are required for the product to be used as it is supposed to be). Why would you want to develop an MVP in the first place? Here are two main reasons:
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1To validate your idea in practice and test the demo version of your product on early adopters, without investing a hefty amount of money in the development process.
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2To get investors for your startup. An MVP makes it much easier to attract new investors to your project. Providing real life results — based on prototype tests — is the only way to prove to prospective stakeholders that your product meets users’ demand and is worth investing in.
The major share of today’s biggest tech companies like Amazon, Etsy, Spotify, Twitter, Dropbox, etc. started their journeys by creating MVPs. To this day, designing an MVP is the most common practice among startups, used to verify the market acceptance of a product. It’s fast, reliable and cost-effective.
Read also about building an MVP for online marketplace.
Final thoughts
The software as a service architecture concept is “the new black,” steadily squeezing out the on-premise and other traditional software distribution models from the market. This is a natural development of the industry and it is up to us to decide whether to adopt new technologies or stick with soon-to-be-outdated infrastructure.
If you need help designing a saas application, reach out to our team. At WTT Solutions, we specialize in delivering designs for saas apps and other types of cloud products. To get a free consultation with one of our specialists, select the ‘Get In Touch’ option on the top right corner of this page. Don’t forget to subscribe to our newsletter in order to receive all new updates from our team!
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