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August 8, 2023
5min

The SaaS Growth Story

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5min

Software-as-a-service (SaaS) on Cloud

Software-as-a-service (SaaS) has been around since the early 2000s and is a cost-effective alternative to the traditional IT deployment where customers have to buy or build their own IT infrastructures, install the software themselves, configure the applications and employ an IT department to maintain it all.

SaaS offers a connection and subscription to IT services built on shared infrastructure via the cloud and deployed over the internet, rather than purchased and downloaded or installed locally.

With the continuous growth of cloud computing and the clear advantages of subscription-based services, it comes as no surprise that the software as a service market continues to expand rapidly. Many organisations are committed to purchasing SaaS solutions rather than buying and hosting software internally.

Furthermore, on a SaaS provider side, this software distribution model makes it possible even for small companies, to reach a broad range of customers, opening doors to new markets and geographies.

„SaaS remains the largest public cloud services market segment, forecasted to reach $176.6 billion in end-user spending in 2022. Gartner expects steady velocity within this segment as enterprises take multiple routes to market with SaaS, for example via cloud marketplaces, and continue to break up larger, monolithic applications into compostable parts for more efficient DevOps processes.” Source: Gartner (April 2022)

Characteristics of SaaS

SEAMLESSLY AVAILABLE & SCALABLE

Uptime and the ability to respond to continually changing requirements and workloads build the basis for any successful SaaS product. Cloud provides a broad range of capabilities like x and y that can be leveraged to align with the uptime requirements of SaaS environments. It also provides dynamic scaling mechanisms that allow for the alignment of tenant consumption with the actual load.

PAY-AS-YOU-GO PRICING

Continuously managing and optimising costs is essential for SaaS providers. With the elasticity of the Cloud, they are able to build SaaS solutions that are optimised to match the infrastructure of a multi-tenant load and its scaling requirements.

GLOBAL REACH

One big advantage of the SaaS model is fast access to new markets and geographies. The availability of the public Cloud in all the principal geographic regions allows for global reach and high availability due to multi-region set-ups.

SECURITY

SaaS solutions hosted in the cloud providers can be distributed over multiple servers scattered in multiple geographical locations and have automatic backups, ensuring an extremely high level of security.

INNOVATION

The breadth and depth of tools and services available on the Cloud can facilitate a faster time-to-market for SaaS providers. The pace of innovation in the Cloud also provides SaaS companies with new services and capabilities to enhance the features, cost, and management profile of their solutions.

Making the shift: from on-prem to SaaS-enabled solutions

SaaS turns the traditional model of software delivery on its head. Rather than purchasing licenses, paying an annual maintenance fee for upgrades and support, and running applications in-house, SaaS allows organizations to buy only the number of licenses they require as their need fluctuate.

For a SaaS provider, the shift from providing on-premises solutions to becoming a SaaS-based solution provider involves intense levels of continuous testing. This means, by becoming a SaaS provider, there needs to be a shift of understanding within the organization to transform from being a software provider to a service provider.

From an operational perspective, this requires new capabilities, such as meeting service level agreements, establishing real-time usage monitoring and billing capabilities, and meeting strict security requirements.

The robust infrastructure required to provide SaaS services 24×7 requires a substantial investment.

The business challenges are even greater, ranging from the dramatically lower margins provided by SaaS, to changes in cash flow and pricing models, to requirements for customer support.

With this in mind, once a decision is made to make the shift, it will be important to rigorously evaluate the different potential SaaS models and adopt an iterative deployment approach allowing for greater learning and flexibility during the course of the deployment. Software companies and their customers should periodically assess their overall SaaS roadmap to regularly check their progress against their strategic goals.

Accelerate your SaaS journey with Ankercloud

While the advantages of a cloud-based SaaS model are strong and allow a company to focus on its core goals of developing, delivering applications, and improving its customer experience, it is important to pay special attention to key components like infrastructure budget management, capacity management, and platform availability. This is where an experienced SaaS partner like Ankercloud can be the key to a successful SaaS adoption. We support our customers on their journey to develop a SaaS model on AWS with a consolidated approach, years of experience, and deep AWS knowledge.

Curious? Reach out to us at cloudengagement@ankercloud.com

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