Month: September 2022

At its Core, SaaS is a Business Model 2 – The SaaS Mindset

Posted on by Daniel Duggins

Operational Efficiency

SaaS, in many respects, is about scale. In a multi-tenant environment, we’re highly focused on continually growing our base of customers without requiring any specialized resources or teams to support the addition of these new customers. With SaaS, you’re essentially building an operational and technology footprint that can support continual and, ideally, rapid growth. Supporting this growth means investing in building an efficient operational footprint for your entire organization. I’ll often ask SaaS companies what would happen if 1,000 new customers signed up for their service tomorrow. Some would welcome this and others cringe. This question often surfaces key questions about the operational efficiency of a SaaS company. It’s important to note that operational efficiency is also about reacting and responding to customer needs. How quickly new features are released, how fast customers onboard, how quickly issues are addressed–these are all part of the operational efficiency story. Every part of the organization may play a part in building out an operationally efficient offering.

Innovation

With classic software models, teams can feel somewhat hand-cuffed by the realities of their environment. Customers may have one-off customizations, they may have a distributed operational model–there could be any number of factors that make it difficult for them to consider making any significant shifts in their approach. In a SaaS environment, where there’s more emphasis on agility and putting customers in a unified environment, teams are freed up to consider exploring new, out-of-the-box ideas that could directly influence the growth and success of the business. In many respects, this represents the flywheel of SaaS. You invest in agility and operational efficiency and this promotes greater innovation. This is all part of the broader value proposition of the SaaS model.

Frictionless Onboarding

SaaS businesses must give careful consideration to how customers get introduced into their environments. If you are trying to remain as agile and operationally efficient as possible, you must also think about how customer onboarding can be streamlined. For some SaaS businesses, this will be achieved through a classic sign-up page where customers can complete the on-boarding process in an entirely self-service manner. In other environments, organizations may rely on an internal process that drives the onboarding process. The key here is that every SaaS business must be focused on creating an onboarding experience that removes friction and enables agility and operational efficiency. For some, this will be straightforward. For others, it may take more effort to re-think how the team builds, operates, and automates its onboarding experience.

At its Core, SaaS is a Business Model – The SaaS Mindset

Posted on by Daniel Duggins

At its Core, SaaS is a Business Model

By now you should have a better sense of how we characterize what it means to be SaaS. It should be clear that SaaS is very much about creating a technology, business, and operational culture that is focused squarely on driving a distinct set of business outcomes. So, while it’s tempting to think about SaaS through the lens of technology patterns and strategies, you should really be viewing SaaS more as a business model.

To better understand this mindset, think about how adopting SaaS impacts the business of a SaaS provider. It directly influences and shapes how teams build, manage, operate, market, support, and sell their offerings. The principles of SaaS are ultimately woven into the culture of SaaS companies, blurring the line between the business and technology domains. With SaaS, the business strategy is focused on creating a service that can enable the business to react to current and emerging market needs without losing momentum or compromising growth.

Yes, features and functions are still important to SaaS companies. However, in a SaaS company, the features and functions are never introduced at the expense of agility and operational efficiency. When you’re offering a multi-tenant SaaS solution, the needs of the many should always outweigh the needs of the few. Gone are the days of chasing one-off opportunities that require dedicated, one-off support at the expense of long-term success of the service.

This shift in mindset influences almost every role in a SaaS company. The role of a product owner, for example, changes significantly. Product owners must expand their view and consider operational attributes as part of constructing their backlog. Onboarding experience, time to value, agility–these are all examples of items that must be on the radar of the product owner. They must prioritize and value these operational attributes that are essential to creating a successful SaaS business. Architects, engineers, and QA members are equally influenced by this shift. They must now think more about how the solution they’re designing, building, and testing will achieve the more dynamic needs of their service experience. How your SaaS offering is marketed, priced, sold, and supported also changes. This theme of new and overlapping responsibilities is common to most SaaS organizations.

So, the question is: what are the core principles that shape and guide the business model of SaaS companies? While there might be some debate about the answer to the question, there are some key themes that seem to drive SaaS business strategies. The following outlines these key SaaS business objectives:

Agility

This term is often overloaded in the software domain. At the same time, in the SaaS universe, it is often viewed as one of the core pillars and motivating factors of the SaaS business. So many organizations that are moving to SaaS are doing so because they’ve become operationally crippled by their current model. Adopting SaaS is about moving to a culture and mindset that puts emphasis on speed and efficiency. Releasing new versions, reacting to market dynamics, targeting new customer segments, changing pricing models–these are amongst a long list of benefits that companies expect to extract from adopting a SaaS model. How your service is designed, how it’s operated, and how it’s sold are all shaped by a desire to maximize agility. A multi-tenant offering that reduced costs without realizing agility would certainly miss the broader value proposition of what it means to be a SaaS company.

At its Core, SaaS is a Business Model 3 – The SaaS Mindset

Posted on by Daniel Duggins

Growth

Every organization is about growth. However, SaaS organizations typically have a different notion of growth. They are investing in a model and an organizational footprint that is built to thrive on growth. Imagine building this highly efficient car factory that optimized and automated every step in the construction process. Then, imagine only asking it to produce two cars a day. Sort of pointless. With SaaS, we’re building out a business footprint that streamlines the entire process of acquiring, onboarding, supporting, and managing customers. A SaaS company makes this investment with the expectation that it will help support and fuel the growth machine that ultimately influences the margins and broader success of the business. So, when we talk about growth here, we’re talking about achieving a level of acceleration that couldn’t be achieved without the agility, operational efficiency, and innovation that ‘s part of SaaS. How much growth you’re talking here is relative. For some, growth may be adding 100 new customers and for others it could mean adding 50,000 new customers. While this nature of your scale may vary, the goal of being growth-focused is equally essential to all SaaS businesses.

The items outlined here represent some of the core SaaS business principles. These are concepts that should be driven from the top down in a SaaS company where the leadership places clear emphasis on driving a business strategy that is focused on creating growth through investment in these agility, operational efficiency, and growth goals.

Certainly, technology will end up playing a key role in this business strategy. The difference here is that SaaS is not a technology first mindset. A SaaS architect doesn’t design a multi-tenant architecture first then figure out how the business strategy layers on top of that. Instead, the business and technology work together to find the best intersection of business goals and multi-tenant strategies that will realize those strategies.

As we get further into architecture details, you’ll see this theme is laced into every dimension of our architecture. As we look at topics like tenant isolation, data partitioning, and identity, for example, you’ll see how each of these areas are directly influenced by a range of business model considerations.