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.