16 Ingredients of a Successful SaaS Company

blog.techcello.com/2014/05/16-ingredients-of-a-successful-saas-company/
There has been numerous articles, blogs, whitepapers which highlights the difficulties and challenges
involved in building highly Scalable, Profitable and Sustainable SaaS Applications especially Multi-
Tenant based solutions. These articles points out very few real challenges which are so obvious and
common across any kind of SaaS Applications. The degrees of complexity in building Pure Multi-
Tenant SaaS application will vary from one domain to another for Example: Building a SaaS Application
targeted to HealthCare industry is completely different from SaaS based education or collaboration
platform. Now lets look at the 16 Ingredients of a Successful SaaS Company,
1. Customer Acquisition
Whether you are building a next salesforce or a simple application Customers are the one who are
going to help you win your breads. So the important point is the
SaaS offering must provide easy self-serviceable model where
customers come on-board themselves like 1-2-3 steps. There is
a self-assumption between ISVs as some products can never
be automated or built as configurable. There may be one or two
such complex products where it requires some level manual
intervention to on-board a new customers, but 90% of the
application can be automated to remove the hindrance of
manual participation.
Please email me if you believe your current application can
never be made self-serviceable.
2.Freemium
Freemium is one of the captivating strategies to
make customers to try your solution first hand
before they make a purchase decision. It has now
become a standard for all SaaS application
irrespective of the domain or segment they target.
Many SaaS products provide 10/15/30 days free
trial by default but now there are SaaS Products
who provide a free subscription for life long without
any charge (very limited or entire functionality) with an assumption of they can convert these customers
showing the high value of other plans in their product.
3.Trial Analytics
Its extremely important to know where our customers are heading to. Researchers from SaaS
University (http://www.softletter.com) reports only about 25% of Trials Customers are getting converted
to real paid customers on an average. There is no optimal conversion rate; ideally every provider wants
to convert 100% trial Customers to Paying Customer. If this is not the case, go back to your analytics
and see where the problem lies. Analytics play a vital role in understanding the Customer behaviour,
Usage pattern, which feature excites the users most etc.
4.Subscriptions
Its the Heart of the SaaS Applications because Customers will look at your Offerings and Feature sets
and then next immediate step is how you offer them and how have you classified and how much it will
cost. Lot of research and homework required to properly classify the features and components into
appropriate packages. The best way is to look at
your competitors and see how they are offering
and are they dividing the packages with
appropriate features. Below are some of the best
practises to consider when we create Subscription
Packages
1. Make sure Minimum Base Value proposition
of your product is given in all the Packages
2. Determine the frequency of Usage among all
the Features and identify which feature should
go where
3. Make sure the Entry level Price is reasonable
for your targeted Customers
4. Explore if Freemium model is the best for your
product
5.Managing Billing
Whatever may be the secondary motto behind
running a SaaS Business, but the primary reason
is Monetization. So Recurring Billing is one of the
major area where you should focus at. Recurring
billing comprises of lot other sub component such as
A.Pricing Plans
B.Usage based/Flat Pricing
C.Pre-Paid & Post Paid
D.Support for multiple Currencies
E.Taxing

A.Pricing Plans
Like we mentioned each customer is unique,
their size of their pocket is also different and if
you want to cater all size of companies from Startup , SMP and Enterprises, you application must of
dynamic pricing that could different pockets. In general, you have to identify an attractive pricing for the
value that you provide, but for customers who negotiate, who doesnt fit the regular pricing you should
also offer a way to accommodate such customer as well.
But end of the day, its your call to accommodate or not to accommodate such customers!
B.Usage Based/Flat Pricing
These 2 are the widely accepted pricing model of the SaaS breed applications. As an application
provider decide which will suit better for you. If your strategy is to bill based on usage, then you must
employ metering engine to audit the usage by Customer/User.
C.Pre-Paid & Post Paid
Identify when you want to charge the Customer, i.e. Do you want to charge the Customer on the first
date of the billing cycle (Pre-Paid) or do you want to charge by the end of the month (Post-paid).
Carefully analyse the market and your competitors and look at how and when they charge the
customer, on the whole Post-Paid model is a widely accepted and most used model in the SaaS world,
but if you have a compelling, niche offering and no competitors in the market and if you believe the is
more volatility from the customer, you can choose to go with Pre-Paid.
D.Support for multiple Currencies
SaaS Applications are built for global customers hence supporting multiple currencies and language is
a mandatory feature that will enable you to attract global customers.
E.Taxing
Although SaaS Taxing is a difficult and dynamic in nature you have to deal with it, but on top of when
you deal with global Customers it brings in lot more complexity and awareness to all the taxing.
6.Security
Security is the most debated topic when it comes
to building, embracing and adopting Multi-Tenant
SaaS Applications. Yes, because the fact remains
that all the customers are going to use the same
application hosted away from the client secured
firewall and customer might not know where the
data resides etc. Security must be taken very
carefully within the application at all the layers of
the application including but not only limited to
WEB/Business Logic/Data Access etc.
Application must form a strong boundary against
each Customer License, Feature Access, and
Confidential data.
Below are the brief listing of the top 10 security issues (by OWASP) that your SaaS offering should
address:
1. SQL, operating system or LDAP injection
2. Insecure authentication and session management
3. Cross-site scripting because of lack of data validation
4. Insecure exposure to references like files and directories
5. Incorrectly configured (from a security perspective) databases, middleware and operating
systems
6. Exposing sensitive data like user IDs, passwords and personal identification information
7. Checking for access inside the business logic on the server side
8. Cross-site request forgery
9. Using components with known vulnerabilities
10. Invalidated redirects and forwards
https://www.owasp.org/index.php/Category:OWASP_Top_Ten_Project
7.Designing ideal DB Isolation
There are different data isolation model discussed in the context of multi-tenant SaaS Applications, but
there is No Rule of Thumb for choosing an ideal Isolation model for your SaaS Application in specific,
because each of the isolation models listed above
has its own Pros & Cons.
One model could work better for one
domain/business may not work effectively for other
business, however choosing an ideal data isolation
which works better is the challenging task itself.

Click here to Read more:
http://blog.techcello.com/2014/04/which-design-
strategy-should-i-follow-for-data-isolation-in-saas-model/
8.Customizability & Configurability
Each customer, the business they do, the problem
they solve, the domain they breathe are completely
unique and hence their need is entirely different
from others. Dont ever think of building a
monolithic stack or a black box that can only work
in a definite model.
Give the buckle and straps of the belt to the
customer and let them customize and configure
the application for the way that works better for
their organization and the culture.
Some of the basic customization a SaaS application must have is
Look & Feel customization
Language Preference
Support for Custom Fields
Allowing user to change the business policies
Email Templates
Workflow Customization
Billing Related Customization
Master Data Manipulation
9.SaaS Integration
One of the major hurdles for SaaS is the Security of Data in the Cloud; the second biggest concern for
SaaS adopters is its integratibility. Enterprises & SMBs are already using bunch of Cloud based and on
premise applications for lot of years, so the basic expectation from the new SaaS Applications they
would like to acquire is to seamlessly integrate with the rest of the applications. Hence, its
recommended for building SaaS Application that communicates to other external applications
irrespective of the location.
10.Self-Servicing
SaaS is a low margin and high volume business game; unless you make your application self service-
able and manageable you may end up spending a lot in servicing your customer needs. Always think
about building features & capabilities that will be very user friendly and self-service-able with less or no
support from the Product development and support team. The more self-service-able your application
is, lesser the cost you spend on service, lesser
customer churn, and happier customer.
Self Service has become one of the important non-
functional aspect of all customer facing
applications, hence do not abandon.
11.Performance, Scalability & Availability
These 3 keywords must be the Mantras of any
Web based Application and especially for Muti-
Tenant SaaS Applications. Always build products
for these NFRs in mind to get more customers and
sustainable growth and reduce the churn.
Just imagine that you have 100 Customers and the
application has gone down for about 2 hours due
to some software/hardware failure, or in a sunny
day some 50 Customer on-boarded and started
using the product heavily, because of this the
performance of the product gone down for the rest
of all the customers. In either of these cases, it
depends upon how the application is built,
deployed and served as well as how scalable and
available the product is.
12.Maintenance & Operations
Maintenance & Operations are the 2 eyes of your
product, because SaaS applications are
developed, deployed, maintained, serviced by
SaaS providers. Hence it is ridiculously important
to make sure maintenance and operations are so
easy and effective.
Some of the best practises followed by SaaS
providers are
Keep Customers informed about planned
maintenance activities
Make sure the maintenance activities are
done on off hours so that customer do not get
effected
Have redundant servers in other availability
zones, so that when you do an maintenance
activity at one
Learn from outages and make sure its not
repeated in future
13.Choosing the perfect Cloud
Where should I host my SaaS Application?
This is one of the most asked questions by every SaaS ISVs. Choosing a right Cloud Provider is a
major challenging task for the SaaS providers and the success of the providers is also dependant on
the cloud they choose. Because the various
parameters that will help you to evaluate clouds
will affect the pricing and offering of your solution.
Whatever may be your cloud choice, just make
sure it adheres to these Rules of Perfect Cloud
Pricing
Expertise
Reliability
Financial Stability
Easy Manageability
Customer Support
Transparency
14.Messaging/Notification
Messaging is a must have cross cutting
component for internal users & external users
informed. Any actions taking place in the
application must be communicated to appropriate
users.
This notification system must be entirely dynamic
and flexible in nature. Some of the important
aspects to Notification systems are
1. Provide WYSIWYG editor for the tenants to
author the content by themselves
2. Support for Multi-language
3. Support for modifying Notification Dispatch details such as SMTP, PORT No, from & to address
etc.
Because some SaaS consumers might want to send emails from their own Mail server instead of
the SaaS Providers own mail Servers, also if the SaaS Provider limit the no. of emails sent from
their own mail server, customer can hook their own and send unlimited emails from the system
4. Support for Place Holders in the email content to inject dynamic content that comes from the
Data store.
15. Dynamic Workflow
Every business process happens within an application has a flow for guaranteed, but this
flow can never be hardcoded in a SaaS Application
because the more you hard code any logic in your
application, the more complexity it becomes as
well as the application has the danger of become
like a huge black box. Its a general practise to
make any process configurable/customizable and
extendible, so that your customers can customize
the process flows as per their organizational
needs.
For a SaaS based CRM application, Workflow
automation lets them streamline the sales,
marketing, and support processes. Write their own
rules. Simplify their sales follow-ups based on your unique business needs.
16. Business / Customer Analytics
Generally SaaS Analytics is a huge topic by itself.
Analytics is extremely important but not just limited
to Customer Analytics but it is important to capture
for all the Non Functional components of the SaaS
solution. To stick with the topic, lets try to
understand the Customer Analytics in detail.
As a SaaS product Owner, are you not interested
to understand,
How many trial customers are actively
evaluating your product?
How are your paid customers using your solution?
How to identify the potential customer from the huge list of trial customers
Customer Analytics empowers SaaS owners recognize this information well ahead and take informed
decisions and actions.
Hope you keep these pointers in mind, the next time you build/migrate your next Multi- Tenant SaaS
Application. But if you dont have enough time to concentrate on all these aspects, please look at
Techcello, a Multi-Tenant SaaS Life Cycle Management Solution, built for Scalability, Flexibility,
Customizability, Configurability and ISVs in mind.
Please feel free to contact me [ Ilyas.f@techcello.com] to contradict any of the pointers mentioned here.