The SaaS Checklist - Will My Software as a Service idea Work?
Software as a Service has become the standard way to deliver business software to end users - solutions that are usually externally hosted, web based and sold on a subscription basis.
The appeal of SaaS to the software developer is that you don’t have to worry about installing software at a client’s site. And even better, you might not have to visit the client to make the sale. Most SaaS solutions are also multi-tenancy, so you only have to support one installed application.
Have you got a good idea for a SaaS solution? Maybe you’re aiming for a self sign-up solution - the client hears about your solution, finds it online and decides to register. Here are 10 questions you can ask yourself about your SaaS idea. There not in any particular order. The idea is to get you to think a bit more about some of the issues you’ll need to tackle as you take your idea to market.
- Does a market for your product/service already exist? Your job is going to be a hundred times harder if you’re about to sell an online solution to a problem that customers don’t even know they have. Original ideas are great but there are two reasons why no one else is doing what you want to do - either you’ve struck real gold and you’re going to be first into a lucrative new market or there’s never been a market because no one wants what you’re trying to sell.
- Are you in a market where your customers will potentially sell your solution for you? You have to market your SaaS solution - that’s harder than you think. How will people find it? Nothing beats word of mouth recommendations from happy customers. In some sectors there’s less competition between organisations and people will recommend you to colleagues from other organisations when they meet at conferences and other events. Education is a good example. The charity sector is another.
- Will customers pay a minimum of £2500 per annum? That’s an arbitrary figure but it helps to make a point. How do you charge enough to make the whole thing worthwhile? £500 per customer per annum means you need a lot of customers before you make any real money. How many customers are you really going to pick up in year 1? How many organisations in your target market?
- The person who signs up - do they need to get some kind of internal sign off before they can use your software? It’s great if they don’t. Business solutions that get round internal IT departments and other potential procurement obstacles are great. Salesforce is a good example here - an enterprise customer relationship management system that picks up new clients because somebody in a company decides to sign up for a free trial.
- Does your SaaS idea solve a painful problem? You want to sell aspirins, not vitamins. People will pay for the aspirin because it takes away a pain. The vitamin's a much harder sell - that’s software that seems like a nice idea, but doesn’t fix an immediate problem and instead promises some later benefit.
- Can you see a road map of other add ons that will bring in more revenue? You want a tiered service or some extra modules so you can begin to upsell. It could be that a customer isn’t really profitable until you them to upgrade.
- Is it a low friction start? A solution that only works if the customer has to do some kind of complicated setup will be harder to sell. Again, your ideal solution might be one that gets into an organisation because an employee decides to sign up. The employee’s not going to do that if they know they’ve then got to make a lot of other things happen before they can use the software. A solution that requires a big initial transfer of data from paper or other systems will struggle.
- Can you build a minimum viable product (MVP) version of your SaaS solution for modest cost and then use it to test the market? A simpler solution will cost you less. There’s another important point here also - some SaaS solutions do fail because they contain too much functionality. You’re trying sell a subscription based self-service solution - users will walk if they think the software is too complicated.
- Can you start in a narrow market niche and then spread outwards? A niche is good because you’ll spend less on marketing. Word of mouth should also work better in a niche. Even better if you can then spread out into other sectors.
- Are you in a market where some of the competition is still classic on-site enterprise software? This seems like a question that’s worth asking because maybe there are opportunities in that kind of market for smaller suppliers who can innovate quickly. It is expensive, complicated and risky to migrate established enterprise software to a SaaS type model.
Software as a Service has really taken in the last few years but that doesn’t mean there aren’t still opportunities for people who understand a specific business problem in a particular niche. And customers like the SaaS model - they don’t want the hassle that comes with installed software and they’ll pay a sizable subscription for software that adds real value.