How to Develop a SaaS Application

SaaS app development is an intricate and rewarding process for many product developers.

I’ve worked in the product development and user experience (UX) industry for the past decade. The Software as a Service (SaaS) domain is my favorite — not only because I get the chance to work on products with a unique depth of problems, but also due to the blistering growth of the SaaS market over the past several years.

With innovations in technologies such as advanced cloud computing, data science and generative AI, there is an abundance of creative solutions to solve complex problems. SaaS remains the largest segment of the cloud market by end-user spending, and the market is projected to grow by 17.9% to a total of $197 billion in 2023, according to Gartner.

Building a robust, scalable and efficient SaaS application can be truly challenging, but understanding the key concepts and components behind it can make the process more manageable. Cloud computing has become instrumental in the growth of SaaS by providing the necessary infrastructure, scalability, accessibility, cost-efficiency, innovation and collaboration capabilities that product developers need.

In this blog post, I’ll walk you through how to create a SaaS application and offer some strategies for mastering SaaS app development. I’ll also share the perspective I’ve gained from building SaaS applications for our clients here at York IE.

In This Article

• What Is a SaaS Application?
• Types of SaaS Applications
• Benefits of SaaS App Development
• How to Create a SaaS Application
• Challenges of SaaS Development
• How to Structure Your SaaS Development Process
• Getting Started with SaaS App Development

What is a SaaS Application?

A SaaS application is a cloud computing service that delivers software to users over the internet. Under the SaaS model, software is centrally hosted and managed by a provider, who takes care of the underlying infrastructure, maintenance and updates. The service provider often makes the platform available to customers on a subscription basis via web browsers or mobile apps.

An excellent way to understand the SaaS model is to think of it like a bank. A bank protects each customer’s privacy while providing reliable, secure and efficient service. A SaaS application does the same. The SaaS model helps your business use its resources more efficiently. By harnessing the power of SaaS features, your business will improve customization, lower costs and become better connected to those who matter.

The key customizable characteristics of any SaaS application are:

Centralized hosting: SaaS applications are hosted on servers managed by the SaaS provider. This centralized hosting allows users to access the application from anywhere with an internet connection, without the need for local infrastructure or hardware.

Subscription-based pricing: SaaS applications are typically offered on a subscription basis, where customers pay a recurring fee to access and use the software. This pricing model often offers different tiers or plans based on features, usage or the number of users.

Automatic updates and maintenance: SaaS providers are responsible for maintaining and updating the software. This includes applying bug fixes, security patches and introducing new features or enhancements. Users benefit from seamless updates without having to perform manual installations or maintenance tasks.

Scalability and flexibility: SaaS applications are designed to scale easily to accommodate varying levels of usage and user demands. The underlying cloud infrastructure enables rapid scalability, allowing the SaaS provider to handle increasing numbers of users and provide a consistent user experience.

Multitenant architecture: SaaS applications often employ a multitenant architecture, where a single instance of the software serves multiple customers or tenants. Each customer’s data and configurations are securely segregated and isolated from one another.

Additionally, SaaS applications may be horizontal or vertical in nature.

Horizontal SaaS Apps

Horizontal SaaS refers to a type of SaaS application that is designed to serve a broad range of industries or business functions. It provides general-purpose functionality that can be used by organizations across various sectors, regardless of their specific industry or vertical. Examples of popular horizontal SaaS applications are Microsoft Office 365, Slack, Salesforce CRM, HubSpot, Mailchimp and Dropbox.

Vertical SaaS Apps

Vertical SaaS, also known as industry-specific SaaS, refers to an application that is designed and tailored specifically for a particular industry. Vertical SaaS applications focus on meeting the unique needs and requirements of a niche market. They provide industry-specific features, data models and workflows that help businesses in that industry achieve operational efficiency, compliance and competitive advantage.

At York IE, we specialize in vertical SaaS app development for our clients. I have personally had the chance to design and manage products within niche market segments, including:

• demand generation tools to help marketers and sales teams manage their leads;
• e-commerce tools that provide a better post-purchase product experience; and
• a platform to help athletes find better corporate jobs after their sports careers.

Types of SaaS Applications

Common types of SaaS applications include:

• customer relationship management (CRM);
• enterprise resource planning (ERP);
• project management;
• accounting and finance;
• human resources management (HRM);
• communication and collaboration;
• content management system (CMS);
• analytics and business intelligence;
• e-commerce;
• healthcare management.

In my experience, each type of SaaS software has its own special approach to fixing the particular problem of the users, whether that’s receiving a card payment, sending a file to your manager or creating a board with tasks for your team.

I always believe it’s important for businesses to assess their specific needs, market dynamics, key resources and the customer benefits of SaaS applications before deciding to develop one.

Benefits of SaaS App Development

There are several benefits of SaaS app development, including:

• scalability;
• cost-efficiency;
• faster time to market;
• improved customer experience;
• data security and backups; and
• competitive advantage.

York IE’s B2B clients are looking to solve complex business problems. As business owners, they want to serve the best possible solution to their users —  but they often need guidance in understanding the cost of the solution, how efficient and scalable it will be and how their end users’ data will remain secure.

I always advise our clients to first consider and understand the benefits of the SaaS app and its long-term rewards.

Scalability

SaaS applications are built on a cloud-based infrastructure that allows for easy scalability. As the number of users or the demand for the application grows, the underlying infrastructure can handle the increased load without requiring significant investments in hardware or infrastructure upgrades.

Cost-Efficiency

By utilizing cloud infrastructure and shared resources, businesses can reduce upfront costs associated with hardware, server maintenance and software licensing. Additionally, SaaS applications often operate on a subscription model, providing a steady and predictable revenue stream.

Faster Time to Market

Developing a SaaS application can be quicker compared to developing traditional software that needs to be installed and configured on individual user devices. With SaaS, updates and new features can be rolled out centrally, ensuring all users have access to the latest version of the application simultaneously.

Improved Customer Experience

SaaS applications often provide a user-friendly and intuitive interface, as well as regular updates and enhancements. This leads to a better user experience for customers, making it easier for them to adopt and utilize the software effectively.

Data Security and Backups

SaaS providers often implement robust security measures, including data encryption, access controls and regular backups. This ensures the security and integrity of the data stored within the application.

Competitive Advantage

Developing a unique SaaS application in a specific industry or niche market can provide a competitive advantage by addressing specific customer needs or industry requirements. It can differentiate a business from its competitors and attract a loyal customer base.

While there are potential benefits, there are also considerations that businesses need to consider when engaging in SaaS app development: costs, ongoing maintenance and the need for a robust infrastructure. It’s very important for businesses to have a clear roadmap of development and cost expenditure before starting the SaaS development process.

How to Create a SaaS Application

To create a SaaS application, follow these nine steps:

1. Define your business objectives.
2. Research your market.
3. Choose your technology stack.
4. Assemble a development team.
5. Set up SaaS infrastructure.
6. Implement user management and authentication.
7. Build core functionality.
8. Implement payment and billing.
9. Plan for extended support.

No SaaS development process is identical to another. Each application is dynamic on its own based on the nature of the business and the market it is catering to. However, these steps provide a framework that any development team can follow.

1. Define Your Business Objectives

Start by clearly defining your business objectives and identifying the problem or need that your SaaS application will address. Understand your target audience, their pain points and the value your application will provide.

2. Market Research

Perform thorough market research to identify existing competitors, understand the market landscape and determine the demand for your proposed SaaS application. Assess the competition, pricing models and market trends to find your unique product positioning. Then outline the features, functionality and user experience of your application. Create wireframes and design mockups to visualize the application’s structure and interface.

3. Choose the Technology Stack

Select the appropriate technology stack for your SaaS application. This includes choosing programming languages, frameworks, libraries and databases based on your application’s requirements and your team’s expertise.

4. Assemble a Development Team

If you don’t have an in-house development team, you’ll need to find a reliable team of developers and designers. Consider hiring experienced professionals or outsourcing the development to a reputable software development company. Start building the application using agile development methodologies. Break down the development process into smaller tasks and sprints to ensure steady progress.

5. Set Up the Infrastructure

Choose a cloud provider such as Amazon Web Services, Microsoft Azure or Google Cloud Platform to host your application. Configure servers, set up databases and implement security measures to ensure data protection and scalability.

6. Implement User Management and Authentication

Develop a user management system that allows users to sign up, log in and manage their accounts. Implement authentication mechanisms, such as username/password, social login or multi-factor authentication, to secure user access.

7. Build Core Functionality

Focus on implementing the core features and functionality of your SaaS application. Ensure that the application performs efficiently, delivers the intended value and solves the identified problem effectively.

8. Implement Payment and Billing

Determining the right pricing model and packaging options can be challenging. Integrate a payment gateway to handle subscriptions, billing and invoicing. Set up a pricing model and offer different subscription plans based on features and usage levels. Ensure the security and reliability of payment transactions.

9. Plan for Extended Support

Regulatory compliance: SaaS applications may need to comply with industry-specific regulations and adhere to relevant security standards. Keeping up with these evolving requirements can be demanding.

Customer support and user experience: SaaS applications require effective customer support mechanisms to address user queries, troubleshoot issues and provide a satisfactory experience. Pay attention to user onboarding and provide comprehensive documentation, tutorials and customer support channels.

Continuous monitoring and analytics: Monitoring the application’s performance, tracking usage metrics and analyzing data are vital for identifying bottlenecks, improving performance and making data-driven decisions. Implementing a robust monitoring and analytics infrastructure is essential for continuous growth.

Many early-stage founders believe that once their product is launched, it will drive automatic traction. They think, understandably, that since the product itself is great and is in alignment with their vision, they’re primed for success.

But there’s a famous saying in product development: “We are not our users.” It’s always risky to assume user behavior without tracking their activities and gathering continuous feedback from them.

Once launched, the product must be adjusted in an iterative cycle that requires continuous improvement, adaptation and responsiveness to customer feedback. It’s essential to stay agile, learn from user interactions, address all the challenges carefully and evolve the application accordingly.

Challenges of SaaS Development

Some of the most common challenges of SaaS development are:

• Choosing the right development stack
• Selecting the proper cloud infrastructure model
• Managing customer expectations
• Ensuring smooth development and deployment
• Managing data

Choosing the Right Development Stack

It’s imperative for leaders to choose the right tech stack as the foundation for their SaaS application. Whether you’re a technical founder or not, you should understand how these decisions affect the development of your product.

Founders must consider whether or not the tech stack they choose will provide a scalable and robust architecture. If your application is built on top of a framework that hasn’t been proven in production or can’t handle large amounts of traffic, then you’re setting yourself up for problems down the road.

Selecting the Proper Cloud Infrastructure Model

When it comes to SaaS application development, you might ask yourself: “Private or public? Hybrid or not?” While there are many factors to consider when determining the best way to host your SaaS application, cost is one of the biggest considerations.

Public clouds are often cheaper than private clouds. You’ll have to weigh that against the fact that public clouds have limited control over the infrastructure and resources available for your application. You’ll also have less control over security and uptime issues, as well as storage and data backup. On the other hand, a private cloud gives you more control over these factors — but at a higher cost.

Managing Customer Expectations

The SaaS application development process has a lot of moving parts. A single feature can take weeks to build, and that’s only after you’ve done the research and planning. Plus, as your application grows, so does the number of people who need to be involved in development and testing. All of this means that it’s crucial to manage your customer’s expectations around new features and improvements to existing features.

Ensuring Smooth Development and Deployment

One of the frequent challenges I face is ensuring that the app is deployed smoothly. Many factors come into play in the deployment process after its development, including giving equal focus on front- and back-end development, which includes factors like maintaining the look and feel of the app and optimizing app loading time during peak usage to provide a smooth experience to customers.

While deploying the app, the choices made — like the platform used to create the app, the database management system used to store data and the hosting provider’s infrastructure — can play a vital role.

Managing Data

It can be very difficult to keep track of data that’s being shared between different applications and ensure that your applications are using the same version of the data. This is especially important when dealing with sensitive information such as credit card numbers. I highly recommend using data management and storage services to ensure you have some kind of backup system in place. If anything goes wrong with one machine, there will still be a copy somewhere for backup.

Developing a SaaS application requires a combination of technical expertise, strategic planning and a deep understanding of customer needs and expectations. Addressing these challenges effectively can contribute to the success and competitiveness of any SaaS product.

How to Structure Your SaaS Development Process

The SaaS development process includes six key components:

• managing your stakeholders;
• practicing regular communication and collaboration;
• engaging in roadmap planning;
• assessing and mitigating risks;
• prioritizing quality control; and
• taking an iterative approach.

The SaaS app development process can be rewarding and fulfilling. Effective planning, collaboration, and a proactive approach come together to solve some complex, real-world problems.

Manage Your Stakeholders

Engage with stakeholders throughout the development process. Keep them informed of progress, involve them in key decision-making and address their concerns or feedback. Regularly update stakeholders on the status, milestones achieved and upcoming plans to maintain their confidence and support.

Practice Regular Communication and Collaboration

Establish open and transparent communication channels with the development team. Conduct regular meetings, such as daily stand-ups, sprint planning and retrospectives to keep track of progress, address any roadblocks and foster collaboration. Encourage the team to share updates, challenges and achievements.

Engage in Roadmap Planning

Collaborate with your team to create a detailed product roadmap that outlines the key milestones, deliverables, and timelines for the development cycle. This helps align everyone’s expectations and keeps the team focused.

Assess and Mitigate Risks

Identify potential risks or obstacles that may impact the development cycle. Work with the team to develop strategies for mitigating those risks. Regularly monitor and address any emerging risks to keep the team on track.

Prioritize Quality Control

Establish quality standards for the product and implement quality control processes throughout the project. Regularly review and test the product to ensure it meets the defined criteria. Address any quality issues promptly.

Take an Iterative Approach

Encourage a culture of continuous improvement within the team. Regularly reflect on the development cycle, gather feedback from team members and identify areas for improvement. Implement iterative changes to optimize the team’s performance and processes.

Each organization probably takes a different view of the SaaS development process, based on team size, resource allocation and the stakeholders and agencies involved. But it’s essential to keep the outline of this structure in mind while undergoing any SaaS app development process.

Getting Started with SaaS App Development

Cloud computing and SaaS have come a long way in helping companies develop end-to-end integrated solutions. With increasing awareness and uptake, organizations are developing SaaS integration platforms for building additional SaaS applications. With companies adopting various services, long-term relationships with service providers will grow, leading to innovation as customers’ evolving needs are understood and provided for.

SaaS applications continue to address critical business challenges, such as predicting which customers will churn or which cross-selling practices work best. With the need for high-volume data, software performance and backup increasing daily, it’s easy to see why so many businesses are choosing to outsource to cloud-based providers.

SaaS and cloud computing will continue to be the future. I suggest you ride the wave, too.