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How to Develop a Software-as-a-Service Application? The Complete Guide

15 min read

Are you a startup founder, product manager, or serial entrepreneur who wants to know how to develop a SaaS platform?

If yes, then continue reading to learn the following:

  • The key concept of SaaS software development,
  • The benefits of SaaS application development,
  • How to develop Software as a Service?
  • The required SaaS development team and tech stack,
  • Challenges to developing SaaS,
  • Cost of developing a Software as a Service application,
  • How to find a reliable SaaS development partner?

Now that you have a concise idea of what we’ll discuss, let’s start with some key concepts about SaaS development to know.

If you prefer visual to text, then go straight to the “How to develop a SaaS application from scratch?” bonus infographic.

Key Concepts of Software as a Service

The SaaS market is enjoying a real-time growth of 18% yearly, making it the fastest-growing market for startups that deliver cloud-based solutions to businesses and consumers.

Let’s take a look at some noteworthy growth rates experienced by some SaaS companies:

The illustration describes some SaaS-companies that have proven themselves by key revenue indicators

More inspired by the impressive growth and adoption of the SaaS architecture? Let’s educate you more on this technology.

What is the Meaning of the Software-as-a-Service Model?

Software-as-a-Service or SaaS is a model for accessing web applications over the Internet.

In other words, the hosts of the software in the cloud server allowed anyone to access it through a browser.

The host undertakes both updates and maintenance, and users don’t have to install the application on their devices.

What is SaaS Application Development?

SaaS development is the creation of cloud-based applications. It includes the creation of documentation, design, development, testing, and deployment on the server.

The illustration describes what the basic structure of SaaS development is.

 

Interested to develop a new SaaS solution?

Contact us now. We would be happy to share our experience in SaaS development to create a new trend-setting application for you.

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How Is SaaS Different from a Web Application?

All SaaS products are web applications, but not all web applications use the SaaS model. Let’s take a look at the comparison spreadsheet:

SaaS Application Web Application 
  • SaaS applications are apps running on a cloud infrastructure.
  • A SaaS application requires no infrastructure requirement from users.
  • SaaS is accessible via both a web browser or a program interface.
  • The backend is multi-tenant (a feature that allows for sharing costs and resources).
  • The SaaS application is unlimitedly scalable as per NIST requirements.
  • Web applications are hosted on a server.
  • A web application is an app that can be accessed via a browser. Custom WordPress sites that run on a shared server that is customized to function as an application also fit into the web app category.
  • Most web applications, such as scheduling apps, are limited by scalability and availability.
  • Its backend is a single tenant.
The illustration shows the main distinguishing factors between SaaS and web application development process

Follow the link to read more about web app development. Now that you have a more knowledgeable view of SaaS application development, let’s discuss its pros.

What are the Benefits of SaaS Application Development?

The SaaS model offers a lot of benefits to both startups and users.

A major determinant of benefits received by end-users is the approach engaged in the developmental process.

So these benefits only remain as potential without the right product development workflow.

Below are some of the SaaS product development benefits.

Benefit 1. SaaS Is Easy to Deploy

The primary benefit of SaaS over traditional software is the reduced cost and timeframe to deliver the solution to a target market.

Both SaaS subscribers and providers benefit from this since the providers centrally fix, update, and deploy offerings in the cloud, which reduces software maintenance costs.

On the client-side, they don’t have to install newer software versions.

For example, a SaaS provider may easily purchase services via the Google Cloud Platform (GCP).

This ensures that SaaS platforms get the same level of protection as Google services, making it easy for founders to build a website and scale the solution without bothering about data leaks.

Benefit 2. Scalability

An ideal SaaS solution is placed in scalable cloud environments, where it’s easy to integrate with third parties.

Through the use of APIs, third-party-enabled features are easily included within the SaaS app, easing the process of adopting better features to the platform.

Scaling on the user-end is also seamless, as it does not require users to purchase a software or server, as businesses only subscribe to services they need.

If their need changes, they can simply upgrade to a more suitable subscription with a few clicks.

Benefit 3. No Specially Required Hardware

While the SaaS provider requires a great deal of high-tech software or a third-party hosting provider, users can access the platform with any type of device provided that they’re internet enabled.

For example, you’ll need a Windows 10 with a minimum processor of 1 GHz to use Microsoft Word.

However, a SaaS platform like Google Docs allows you to write long-form texts without hardware requirements.

Benefit 4. Secure and Well-Designed Database

The standard security protocols of SaaS database providers include SSL and TLS encryption. This protects user communications and data, ensuring that providers spend less on data security.

But some companies need even more security. For example, if we talk about healthcare app development or medical website development for US-based startups, we need to think through HIPAA compliance.

The same is for European startups, but about GDPR compliance.

The SaaS model allows relatively simple and fast integration of additional protocols. For example, with the use of 3rd party integrations.

Illustration shows four main advantages of SaaS application development

Now let’s talk more about the process of developing a SaaS product from scratch.

How to Develop a Software-as-a-Service Application?

Let’s take a look at the checklist of the 7 stages of the software-as-a-service application development life cycle:

  1. Idea validation,
  2. Elaborating on the requirements,
  3. UX/UI design,
  4. Frontend and backend development,
  5. Quality assurance testing,
  6. Launching and supporting the product,
  7. SaaS product scaling.

Let’s discuss each point in the checklist.

Step 1: Idea Generation and Validation

At the foundation of your creation process are product ideation and validation. Ideation is the creative process of generating ideas and communicating them with the developmental team.

On the other hand, validation entails verifying the idea’s viability before core development.

Although the startup does the preliminary set of idea validation, the development partner carries out the more technical aspects.

Idea generation and validation for SaaS follow this checklist:

  • Create a SaaS idea,
  • Conduct an extensive market survey,
  • Define requisite technical parameters,
  • Create a prototype for your application,
  • Revise the prototype’s compliance with regulatory laws.
The illustration shows the first step in developing a "software-as-a-service" application, namely, generating and testing an idea

Once you have a conceptualized idea, it’s time to move on to the design phase.

Step 2: UX/UI Design

UX/UI design of a SaaS product includes the stages of user experience design and user interface design:

  • UX is about the creation of a blueprint for the platform,
  • UI stands for the look and feel of the future platform.

It’s important to note that any icon, button, or form on the design is an additional feature of the platform.

In other words, drawing a button is much faster and cheaper than developing one. Because behind each button can hide an insane amount of logical connections to various entities, calculations, and integrations.

So be careful about design during the Minimum Viable Product phase to stay on budget.

It should also be mentioned that the design will be used to almost accurately estimate the development price, as well as to decompose the development process into milestones.

But it’s quite a compressed look on the design. Read more about it, in our guide on how to design a SaaS platform.

The illustration shows design stage, which means the second step of SaaS platform development

We’ll move to the description of the development.

Step 3: Development and Testing

The essence of SaaS development is to turn a design into a live platform. What we mean by that:

  • The designer provides the UX/UI design files,
  • The backend engineer then writes the code necessary for the features to function,
  • The frontend developer deploys the design to the server and connects the frontend to the backend,
  • The QA tester develops and runs tests to find and report bugs and manage fixes,
  • And the project manager oversees the entire process from A to Z to manage and coordinate literally everything.

Honestly, it’s impossible to fully describe the development process because different companies have different standards and approaches.

For example, some companies have a fixed-price approach with a fixed scope of work and a fixed team structure.

Others take a time-and-materials approach and can scale up or down the scope of work and team in the process.

However, this description covers all of the most important aspects of the application development process.

This picture describes the basic structure of the third stage of SaaS product development, which describes the development and testing

Now let’s talk about product launch and maintenance.

Step 4: Product Launch and Maintenance

Here, you’ll deploy the SaaS platform via GitHub, AWS CodeCommit, or another launching platform.

The crux of the activity is executed by the DevOps engineer – a team member with expertise in guiding software through its launch phase. After that, maintenance begins.

However, a popular mistake that most tech entrepreneurs make in this phase is not having a budget for maintenance. You need to sort this outright from the initial planning phase.

An ideal SaaS maintenance budget should be about 25% of your development budget. You need $100,000 to develop your Software-as-a-Service solution. Then, your annual maintenance budget shouldn’t be less than $25,000.

The illustration shows key points of the next to last stage of SaaS website development, which means launching the product and maintenance

Step 5: Product Scaling

An important note before we go any further. Founders usually don’t think about it, but you need to attract potential users at the idea validation stage.

We’re sure you’re one of those founders who think about this.

So let’s continue with the idea that once you launch the platform, you will already have your first customers.

What you should do in this step is to constantly collect customer feedback. There are many ways to act so including customer interviews, questionnaires, email feedback, and so on.

It’s quite an essential thing to do.

Because irrespective of your target audience, the market sector, or whether it’s a B2B or B2C SaaS solution, your maintenance, and scaling spending will be on the following:

  • Addition of new features,
  • Analytics and monitoring,
  • Product enhancement,
  • Support.
The illustration describes scaling the product, which is the final step in the development of a SaaS

Now that you understand the developmental steps needed to create a Software-as-a-Service solution.

Let’s take a look at the required team and tech stack.

The Required Team and Tech Stack to Develop a SaaS

There are different approaches to assembling and hiring the required dedicated software development team to develop a custom SaaS. However, let us suggest the most balanced one:

  • Project Manager
  • Business Analyst
  • UX/UI Designer
  • Backend Developer
  • Frontend or Mobile Developer
  • QA tester

The same situation is with the tech stack. Backend and frontend technologies may vary depending on your business or technical requirements, or the team preferences.

This picture describes the technical team that will work on the development of the SaaS product

Here’s the list of the most reliable tech stack to develop an MVP from our perspective:

Backend technologies Frontend technologies
  • Server: nGinx
  • Language: PHP Laravel or Node.js
  • Databases: MySQL, PostgreSQL, Redis
  • Hostings: AWS, Vultr
  • Libraries: Vue.js, React
  • Languages: HTML 5, CSS 3, JavaScript
  • Mobile frameworks: React Native, Flutter, Objective-C, Swift, Kotlin, Java

Now let’s focus on SaaS development challenges.

The Overview of SaaS Development Challenges

Let’s consider the most popular pitfalls that your development team may encounter.

Challenge 1: Integration of Third-Party Services

A typical SaaS app has many features embedded in the platform; some are built by third parties and integrated into the Software-as-a-Service via APIs, while others will inevitably be created from scratch.

One of the most prominent third-party features in most SaaS software is the payment system. This feature helps users make subscription payments or perform monetization/pricing-related activities.

The challenge here is that integration can be challenging, as technical requirements are very complex.

Common payment solutions integrated into SaaS platforms are Stripe, PayPal, QuickPay, Braintree, and Skrill. Due to complexity, each of those payment platforms has API documentation that guides users through the implementation process.

The ultimate way to surmount this challenge is to hire a seasoned development team.

Especially one with a well-knowledgeable QA to perform manual and automated tests to ensure that the third-party integration works appropriately.

It’s worthy of note that the type of third-party integration you’ll need depends on the core function of your Software-as-a-Service platform.

Challenge 2: Having a Secure Database

SaaS applications carry an enormous amount of sensitive information that can be accessed from virtually any device with an enabled web browser. This increases its risk of being hacked.

To prevent this, SaaS database service providers use SSL and TLS as their standard security protocols for encrypting user-to-server communications and those made between two users.

However, this security is not encompassing enough to secure the level of data handled by SaaS solutions.

For guaranteed security, countries are beginning to make laws to guide developmental processes and how the platform is managed. For example, HIPAA compliance for American healthcare software.

The crux now lies in startups finding and contracting their development activities to SaaS development companies that understand the intricacies of HIPAA and GDPR protocols.

The team has to follow the stipulations of these protocols right from the start of development.

Challenge 3: No-Downtime Deployment

A high priority has to be placed on updating the platform regularly. A challenge is that the platform is often inaccessible during the maintenance timeframe.

Traditional systems, while performing an update, will notify users about downtimes. However, since most Software-as-a-Service platforms must be permanently online, their maintenance teams adopt a no-downtime deployment strategy.

A popular no-downtime strategy is a blue-green approach.

The application release model transfers a number of users at scheduled intervals from an older version of the platform to an identical new release – both of which are accessible.

The older version of the software is called the blue environment, while the newer version is the green environment.

The blue environment can either be used as a stand-by in case there’s a fault with one or be used as a template for the next update.

Challenge 4: Management of a Subscription Lifecycle

Software-as-a-Service has a lot of features, and subscription is a complex feature that entails:

  • Subscribing,
  • Trailing,
  • Upgrading,
  • Canceling,
  • Unsubscribing.

These checkpoints all deal with managing subscribers’ lists. And there are two ways to create them, first is by using and creating your subscription system from scratch, while the other entails the use of external APIs.

Let’s help you know what each entails to make a suitable choice.

There are two options for building a system to manage those in your subscription list:

Option 1: Use an External API Option 2: Develop your Solution from the Scratch 
  • By using an external API, you agree to integrate a ready-to-use link from a third party to enable you to manage subscription processes to your SaaS.
  • This is a less expensive and easy method.
  • Before integrating a third-party solution to a Software-as-a-Service, you should budget a fee for API maintenance.
  • An alternative to using an external API is developing your subscription management system from scratch.
  • It’s more expensive as a developer would have to code the entire process into the Software-as-a-Service. However, payment is only made once.
  • It’s also worthy of note that you’ll have to put a lot of effort into researching and implementing your subscription platform.
  • This option offers startups a more customized subscription system that can better serve the site’s purpose.
The illustration shows problems that the development team may encounter when creating a SaaS product

We discussed all the major components of the SaaS development process. Now let’s talk about the SaaS development pricing.

How Much Does It Cost to Develop a SaaS Application?

The SaaS development cost for a Minimum Viable product varies from $60,000 to $200,000. In this article, we will briefly cover this aspect, but you can follow the link to learn more about the cost of SaaS development.

The exact amount depends on a host of factors, primarily determined by the developers’ location, the complexity of the application, and the type of team helping with the development.

However, here we covered only the most essential pricing factors. If you’re interested to find out more, read our guide on how much does it costs to develop a SaaS platform.

Let’s discuss the cost by team type for better understanding.

Cost Defined By Types Of Teams

An important factor that can affect the development cost of your SaaS application is the type of team.

As a startup, you have the option of numerous team types. If you’ve done a little market research, then the chances are high that you’re confused about which is the most ideal for a SaaS platform.

Let’s first help you with an estimated cost implication of each team type; then, we’ll dwell briefly on understanding their intricacies.

Type of team Average development cost, $
In-house 120,000
Local agency 180,000
Freelancers 45,000
Outsource agency 60,000

However, a SaaS company should not aim at hiring the cheapest but getting the best value for the most ideal price. You should aim for the best partner.

Here are the different team types you may partner with:

Type 1. In-house development team

This is a very straightforward situation, where you make a job offering to the public, get prospective developers, test their knowledge, and make your choice.

This option gives you total control over your workflow and creates an opportunity to hold daily briefings with them. They’re always at your “beck and call” for any quick fix.

Pros Cons
  • Since in-house developers will usually work within the confines of your office space, they’ll have a better understanding of your project.
  • Third parties have minimal influence on your project, except where directly permitted. Security protocols are stricter with this team type.
  • Another benefit is that you’ll have full control over the source code-ensuring you have 100% ownership over the project.
  • Opting for an in-house development team is exhausting as the startup caters to taxes, salaries, medical expenses, and workspace.
  • It has a costly and time-consuming recruitment process.
  • Even when there’s enough to hire a noteworthy team, there’s no guarantee that you’ll find one.
  • The hiring process is full of hidden costs. Check out our outstaff calculator to find out the difference.

Type 2. Local development agency

By local development agency, we mean SaaS development team based in the UK, US, and other high-income earning countries.

Pros  Cons 
  • The idea-sharing process here is more natural.
  • This is as time zone delays and cultural challenges are at their barest minimum.
  • Contract breach can be pursued via lawsuits as both parties reside within the same legal jurisdiction.
  • This option is very expensive. You might need an unlimited budget to build the MVP for a basic SaaS platform idea.

Type 3. Freelance developers

They are independent, full-stack developers that have deep experience in single-handedly building Software-as-a-Service sites with diverse tech stacks.

You can seamlessly find one in freelance developers on social media platforms and freelance websites like Upwork, Fiverr, etc.

Pros Cons
  • Hiring a freelance developer with vast experience in SaaS can offer you deep insight into the system’s intricacies.
  • Freelancers may ditch your project mid-way when they receive a significantly higher offer.
  • You have an insignificant influence on the processes involved.

Note: Before parting ways with your money, ensure that you sign necessary documents (e.g., NDA) that bind a freelancer to work on your project and prevent them from sharing sensitive data with the public.

Type 4. Outsource development agency

An outsource development company benefits from other hiring models with minimal risk.

An outsourced development agency provides a dedicated development team that helps companies in other countries develop tech solutions.

A software outsourcing agency provides a possibility of maximizing the potential of your idea, irrespective of technicality and size.

Outsourcing SaaS development is ideal for these platforms, needing extra features such as machine learning and blockchain technology.

This is undoubtedly the most effective method of all the four options provided. It’s mostly popular amongst startups in Germany, the UK, the U.S., Canada, and other high-income countries.

Just like others, it also has its pros and cons:

Pros  Cons 
  • It offers the best cost-value ratio among all options mentioned beforehand.
  • They also offer some extra benefit of access to a highly professional development team made up of business analysts and project managers using agile methods.
  • Like other options described, they also have cons, which entail a constant need to monitor the team’s activities, ensuring that their progress is in-tune with the founder’s idea.
  • How this can be a tentative advantage since involving a founder is natural to any thorough developmental team.
The illustration shows the types of teams you can collaborate with to create a SaaS product that will fit your requirements and goals.

Now, let’s discuss ways to find a reliable SaaS development partner for yourself.

How to Find a Reliable SaaS Development Partner

Creating an effective SaaS solution is primarily dependent on finding the right development team.

Even if you have the most profitable idea ever thought of since technology became mainstream, the wrong team can mess up your idea.

Let’s delve further into some great tips for finding a reliable partner:

Tip 1. Expertise

It’s imperative first to consider past jobs and their understanding of the intricacies of Software-as-a-Service before settling for a SaaS development team.

Creating an ideal SaaS solution goes beyond software engineering practices; the team should also understand the market.

Only choose a team that has demonstrated both a good understanding of your business model and technical know-how of Software-as-a-Service.

Tip 2. Project Portfolio

Every prospective offer you get will be from developmental teams claiming to be the best.

But by surfing through their portfolio, you’ll be able to know what the team can offer you by examining their catalog of projects.

For SaaS, be specific about their past cloud computing projects.

Tip 3. Successful SaaS built

Other than the portfolio, watch out for the success rate of previous Software-as-a-Service it built–and in the lack of any, consider other projects and their ability to create one.

The illustration shows three useful tips to help you find a reliable SaaS product development partner

What’s Next?

Getting to this spot in the article shows that you’re keen on creating your SaaS business solution. And here’s where we can help.

At Spdload, we’ll create a SaaS solution for your startup in just 4 months. Our team has more than 70 professionals and over 5 years of experience creating tech solutions.

Bonus Infographic

Here is a summary of our detailed guide. Learn the highlights of how to develop a SaaS application from scratch.

This infographic describes the detailed process of how to develop a software-as-a-service application from scratch.

Have a SaaS Development Idea?

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