Technology•Oct 14, 2020
Thinking of Taking a SaaS Product to Market? 3 Considerations for Your SaaS Strategy
Recently, many organizations have staffed up for technical transformations as they seek to survive the barrage of disruption that has spread across industries. Those who have succeeded and adapted have landed many organizations in a unique place by creating distinct, valuable solutions to weather these upheavals. Recognizing these accomplishments, executives understand there is opportunity to capitalize on their position by offering some of this intellectual capital externally in the form of software as a service (SaaS).
And why not? Amazon’s Amazon Web Services (AWS) offering began as a side project before it was offered externally and now it has a run rate of over $10 billion. Leaders recognize that incumbent companies frequently fail to recognize new market potential especially during times of disruption, but creating an AWS is not an easy path to follow. Not to dissuade the creation of SaaS, but you must understand that providing a solution as a service product is vastly different than providing a solution internally or for a single customer. It is technically complex and requires a planned approach with the right SaaS strategy.
Internal Advantage to External Solution Requires a Lot of Effort
To determine how much more complex and challenging it is to create SaaS over an internal system or a system developed for a single customer, we can leverage Fred Brooks’ model from The Mythical Man-Month.
In this model, we have software that is internally developed in the bottom left. To turn that into a system (to the right), there is a factor of additional complexity related to the systems and security that surround that software in its ecosystem. Alternatively, software can be turned into a product by adding documentation and operational support. This also adds factors of complexity. Combining products and systems, we multiply the complexity of each to form a product system where we must not only operationalize the software but account for a wide variety of customer ecosystems and use cases.
SaaS Requires a Broad Set of Technical Considerations
Examining the factors of complexity from Brooks’ model, we can break down technical considerations into three key areas of compliance, product engineering, and internal scaling. Each may weigh differently depending on the product system domain. In addition, there may be unique elements not covered here that would be revealed in an external review of the market and growth strategy.
Compliance (legal/privacy/security) - What are the compliance standards your customers will expect you to be able to demonstrate? California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR) considerations are just a couple that may be at the top of your list in terms of privacy, but each of these open the door for a wide variety of compliance practices and documentation that you will need to be able to produce:
Data retention and purging
Software development practices
Security scanning and remediation
Personally identifiable information (PII) requests for review and termination
Data residency (country specific)
Product engineering - Striving to balance internal service costs and complexity with customer adoption can be challenging and must be based on an architecture that promotes enterprise principles for product growth:
Scalability of service
Cloud and infrastructure
Integration packages and interfaces
Performance of operations
Monitoring of systems
Reliability, failure recovery, and service level agreements (SLAs)
Internal scaling - It is not just software that needs to change either. The operational and business teams will need to shift their focus and learn how to provide for a growing contingent of customer expectations:
Testing automation and validation
Upgrade awareness and rollout
Customer support and management
Proactive capacity planning
Software and development automation
Customization vs. configuration
Evolutionary approach to new requirements
Each of these considerations produce business metrics such as customer counts, conversions, customer satisfaction, referrals, etc., and will ultimately drive the success of the SaaS offering. Taking a broad look at these considerations, you can understand why Brooks noted that product systems that serve a wide audience are many times harder than software that solves a problem for a single customer.
Embrace Technology Strategy to Overcome SaaS Hurdles
Recognizing that the challenges of creating, selling, and operating SaaS are distinct from the challenges of developing something of value internally should help align stakeholders and build a case for continued investment. Credera has experience helping our clients recognize the value of their proprietary solutions as well as the opportunities they may have to generate new revenue. To disentangle the factors of additional complexity involved in creating SaaS, our Technology Strategy group can help assess the current technology environment and develop a prioritized set of actions to scale a product system with a growing customer base. As the value justifies the costs, we can help craft a longer-term business and technology roadmap to recognize internal constraints and account for external variability in the market.
If you’re interested in learning more about Credera’s approach to technology strategy, please feel free to reach out at firstname.lastname@example.org.