The SaaS model for business applications has officially cemented its position as the approach of choice for organizations worldwide.
A recent IDC survey reveals that 72% of customers worldwide strongly consider SaaS for new applications, migrations for existing applications, or when renewing contracts on existing software.
As a result, every software provider that hasn’t already introduced a SaaS model must seriously consider making this shift. Doing so can not only help increase margins and strengthen your ability to reach new markets or segments, but it’s also becoming necessary to survive in a highly competitive marketplace.
Making the decision to become a SaaS provider is one thing – actually executing on that change is quite another. Successfully making that shift requires a change in your business model, and that’s not something you can take lightly. As you start on the journey to SaaS, here are three important considerations to keep top of mind.
1) A reduction in cycle times requires updated business processes
The SaaS model focuses on increasing agility by creating operational efficiencies, including a low friction onboarding process for new customers and automated deployments of new versions and features. A big part of that agility is a reduction in cycle times, meaning the time it takes for your team to align on an idea for a new feature, develop that feature, get it into the hands of your users, capture their feedback and then iterate accordingly should be much faster.
As a result, the SaaS model allows for an accelerated pace of innovation that can help increase your customer base. However, capitalizing on this opportunity to expand your market requires fundamental changes to your business model in order to make faster decisions and deliver new features that further increase the market share and product retention. This is the Amazon “flywheel” effect, increasing customer base by adding new features while retaining or minorly increasing fixed SaaS compute costs (vs a more linear managed service type delivery cost structure). This results in larger revenue and margin to allow for more features, and then attracts more customers, repeat ad infinitum.
Critically, this accompanying shift in your business model is one of the areas where organizations struggle most when going through the transformation to become a SaaS provider. That said, proper planning can ensure this part of the shift to SaaS goes smoothly. This planning should include thinking through your current processes and the steps in your existing customer lifecycle and then updating each of those for the type of SaaS model you implement.
Remember, this process helps create the foundation for how you operate, so it’s not something you want to rush through: take the time to review where you’ve been and how you’ll need to adjust that going forward. This is also an area in which working with an experienced partner can make an enormous difference when moving to a SaaS model.
2) You’ll need to shift from a product to service mindset
The transition to a SaaS model requires you to trade a focus on your product for a focus on your customer journey. Quite simply, this means you should always start with the customer, centered around their intent, and then work backwards from there.
For example, you should take the time to answer questions like: Who is our customer? Do you have customer personas that are candidates looking for your service to solve their problem? What are they interested in trying to solve? What does their tenant onboarding and usage experience look like vs a product-focused solution?
The main reasons customers choose SaaS is low friction from purchase to productivity, ease of evaluating your software’s features, and little to no need on their part to manage any components of the solution: does your SaaS design include that? This effort should enable you to deliver a service-oriented experience to your customers while still making sure your SaaS meets their needs.
One of the benefits of shifting to a SaaS model is that this approach enables you to gain a deeper understanding of the customer journey and use that insight to elevate their experience with your software. By exceeding your customers’ expectations in this way, you can position your organization to retain existing customers and take on new ones without increasing your team size or sacrificing service quality.
3) An experienced partner can make all the difference
Once again, this last point comes down to the fact that there are a lot of changes in moving to a SaaS business model and your entire organization will need to make those changes accordingly. Specifically, moving to a SaaS model not only reduces the amount of time to develop a minimum viable product, but it also means you can shift the responsibility of handling the data, storage, and compute requirements to a provider like AWS. Further, the global reach of a provider like AWS means you can deploy to new geographies extremely quickly.
These are just a few of the clear benefits that organizations can realize once they move to a SaaS business model, if they make the shift correctly. Make no mistake: This shift is a big one, and having a partner that has done it before can make all the difference. The right partner can:
- Make the transition as simple and hassle-free as possible for your team
- Recommend a custom path to a cloud multi-tenant SaaS transformation that fits your specific business needs
- Establish the foundation required to build SaaS solutions successfully on AWS
Overall, this partnership can help your team shift to a SaaS business model faster and with less risk – the value of which can not be overstated.
Ready to Make the Shift to SaaS?
Shifting your business to a SaaS model delivers countless benefits, including increased reach, better customer experiences, and higher returns, to name a few. If you’re ready to make the shift, you need to prepare accordingly to realize these benefits, for example by following the considerations outlined here.
Interested in learning more about what it takes and how to get your business ready for the shift? Check out our SaaS Accelerator Virtual Workshop, a free virtual advisory session conducted by AllCloud’s expert AWS Architects, to learn more.