Groove Competition has come a long way since it started in 2011. In fact, it’s hard to believe that the dance competition company, which this year featured nine conventions, 51 regional competitions, and two national finals, initially managed all of their registration and scheduling activities using Excel spreadsheets. It was daunting for the young company to experience many challenges and setbacks in those early years due to the lack of organized data. 

But today, things are very different for Groove. They now have a fully automated event scheduling and enrollment system, along with a Windows-based application for contestant scoring. Groove’s growth has skyrocketed and now it’s one of the top dance convention and competition companies in North America, and one of many thousands of growing SaaS businesses in the United States.

Many companies solve their problems by building custom software. Their willingness to solve problems for other players in the market is the foundation of SaaS Business. That’s exactly what Groove did along with many other successful SaaS businesses.

According to Gartner Research, Software-as-a-service (SaaS) remains the largest segment of the cloud market, with revenue expected to grow 17.8 percent to reach $85.1 billion in 2019. The appeal of SaaS is not hard to understand; in terms of availability, scalability, speed, and security, the SaaS model can’t be matched.  

Based on my years of helping spin up many SaaS businesses across numerous industries, I’ve learned a thing or two about what it takes to succeed in this fast-paced market. This is why I’ve put together a list of what I see as the most important best practices for properly starting and scaling a SaaS business that turns it into a machine.

Serve more customers with a Multi-Tenant Model (and add the ability for each customer to personalize their experience, within reason)

A SaaS application is similar to a multi-tenant apartment complex. In other words, each SaaS has a centralized administration for security, electricity, water, and other facilities. The landlord owns these facilities and shares them with the tenants by charging rent.

If you upgrade security at the main entrance, it gets upgraded for everyone else automatically. Similarly, a SaaS consists of a common code-based application and runs the common instances of the application for multiple tenants (clients/businesses).

However, the confidential data for each tenant is secured from any other tenant. In other words, one tenant cannot randomly enter the apartment of another. The point here is this: SaaS implies multi-tenancy, which means everyone benefits from shared code, elements of the technology stack, and databases. 

But—and here’s the best part of SaaS—every customer gets the same version as other customers, but having the ability to add customizations can make the difference for each customer so they can make it their own. Here’s the best way to think about allowing customizations in your SaaS.

Follow the 80/20 rule on allowing customizations — keep it simple, always

Here is the tricky part of building SaaS applications. You’ve gone from a custom software world, where one person or team asks for upgrades/customizations, to many teams and many customers asking for a different feature set.

In the bespoke custom world, you can make all the changes without too much of an impact. But, if you say yes to every other customer in the SaaS model, you are risking building software that is too bloated and complicated.

Too many customizations can lead to SaaS bloat, in which the application becomes so complex that it becomes practically useless. As a SaaS owner, a good rule of thumb is to focus on the 20% feature sets of customizability which bring 80% of the value. And it also doesn’t hurt to keep in mind Henry Ford’s famous quip, “Any customer can have a car painted any color that he wants, so long as it is black.”

When it comes to SaaS features management, you must balance practicality with simplicity. On the one hand, you want to keep your clients happy, but you also can’t give in to everything on their “wish list.” Basically, be careful about what you (or your customers) ask for. Think before you build and always keep it simple.

Security and hosting absolutely cannot be an afterthought

The one aspect that usually gets overlooked is security. It drives me a little crazy, to be honest, but this does motivate me to make sure that all SaaS applications we create are built with security natively within our applications and infrastructure.

There are two main security-related things we consider when building SaaS applications:

1 — Do you have industry-specific regulations that you have to comply with? (i.e., HIPPA for healthcare, FedRAMP for government agencies, etc.)

For many customers that are regulated, they are unable to use SaaS applications if it’s on the same hardware as other customers, even if they are on the cloud. Considerations like this must be known before architecting and developing your SaaS application.

This is a BIG deal and often overlooked. 

2 — How are you hosting the data?

Hosting is a big concern when it comes to data security. We prefer hosting SaaS applications natively in the cloud since many of the hosting providers offer security natively within their environments.

If you do host in the cloud, make sure everything is hosted in the cloud and that your instances are set by specific region. You can also establish a client cluster comprised of several virtual instances.  

At Sunflower Lab, one setup scenario on our AWS cluster is that we may have 4 large customers sharing Instance A, while 6 smaller customers will be assigned to Instance B.  Everyone is accessing the same URL but the client cluster and instances are parsed out. 

We also recommend clustered hosting; the advantage here is that it distributes services across multiple hardware machines so that single points of failure can be eliminated. This also increases the overall reliability of your SaaS website beyond what single server hosting can provide. 

What’s next?

Turning a workflow, project, or even an established company into a full-fledged SaaS business is as rewarding as it is challenging. There are lots of unknowns along the way and you’ll probably make plenty of mistakes and miscalculations. But at the end of the day, the satisfaction that comes with “owning the building” is unmistakable. 

 There are obviously many things you can’t control in the market. So, instead, you must focus on the things you can control. And one of those things is proper upfront planning and alignment. Practicing my recommendations can radically improve your chances of building a successful SaaS business that helps to make the world a better place.

 Perhaps you’re feeling stuck and unsure about how to get started. Sunflower Lab can help! We have a longstanding track record of helping organizations scale and reach their strategic business goals. Whether implementing process improvements, workflow optimizations, and/or automation solutions, we know what it takes to build a SaaS business that will bring your ideas to life. Give us a call today to find out more!