Great! You Have Gone to Market, Now What?

A successful Software-as-a-Service (SaaS) product launch requires continual market innovation in today’s competitive software marketplace. Software engineering outsourcing often involves rushing these products to market in their 1.0 version, typically resulting in a flawed release that’s disjointed and inconsistent. In contrast, nearshore software development that produces an innovative product and is easily accessible to its customers is much more likely to enjoy long-term success.

Innovation and agility are some of the most important reasons that SaaS deployments are becoming mission critical, according to a 2014 Garter survey. The IT marketing research firm conducted this survey to determine the deployment of cloud services across various delivery models, including SaaS. Joanne Correia, vice president of research at Gartner, stated, “The most commonly cited reasons the survey found for deploying SaaS were for development and testing production/mission-critical workloads.” She added that the survey results were “an affirmation that more businesses are comfortable with cloud deployments beyond the front office running sales force automation (SFA) and email.”

Cost reduction was the most important reason for investing in an SaaS deployment, according to 54 percent of the survey respondents. However, organizing these results by role tells a more meaningful story. Respondents in junior roles such as IT managers and staff clearly indicated that cost reduction was the most critical factor for them. Senior business executives below the CIO level also considered cost to be important, although not at the same rate as staff members. Executives in top IT roles such as CIOs considered operational agility and innovation to be the top drivers in their choice of SaaS products.

Validation

A quality SaaS product may perform better than one that uses aggressive marketing tactics. Software engineering outsourcing projects that aren’t ready for market can be identified by multiple push updates shortly after its release, especially if they add basic functionality that was missing in the first commercial version. On the other hand, customers will often hail a quality product even when it receives little pre-promotion.

For example, Slack is a developer of cloud business software that has experienced remarkable growth in its short history. This firm released a collaboration tool by the same name in February of 2014, which had 285,000 users by November of that year. Slack had over 500,000 active users as of February of 2015. Slack achieved these results by creating an exceptional product rather than making aggressive promotional efforts. Instead, it focused its pre-release efforts on core functionality such as file sharing, searching and data synchronization.

Stewart Butterfield, co-founder of Slack, said in a recent interview, “We developed Slack around really valuing those three things. It can sound simple, but narrowing the field can make big challenges and big gains for your company feel manageable.” Mainstream media began writing about Slack since it was a good product, which increased its adoption rate. Slack is now one of the leading SaaS solutions in addition to being one of the world’s leading collaboration applications. Slack’s story shows that a functional product can outperform one with poor future uptake, even when it has a faster time to market.

Innovation

The nature of a cloud platform means that SaaS developers can easily update their products after the initial release, although the reason for doing so isn’t always clear. The purpose of an update may be to provide basic functionality or additional features that are nice to have. A patch that consists of only a few minor changes can sometimes be only the prelude to a major upgrade. Furthermore, developers may also release an update just to appear innovative and generate more buzz on their product.

A SaaS company will generally find success when it’s able to provide true innovation. For example, Slack was able to find a niche in the communication applications market by developing a solution for office communications. This solution solves the common problem of employees reducing their productivity by constantly sending email to each other.

Other innovators in SaaS include Xero, which released its self-named cloud accounting app in 2006. This SaaS developer was Forbes’ Most Innovative Growth Company in 2015, primarily due to its sustained innovations in cloud accounting. Cloud accounting wasn’t even a recognized industry niche when founder Rod Drury began looking for ways to make business accounting easier. His efforts were well-timed because accountants were also looking for changes in accounting software, which was generally considered mature technology at the time. Drury says that he began developing Xero when he “realized that it was very difficult to get useful information out of your accounting software. There was also no true way to collaborate with your financial advisor.”

Xero is an innovative application that primarily simplifies accounting for small business owners. It was the first application to host various accounting functions on the cloud such as accounts payable, account reconciliation, invoicing and payroll. Xero has also been able to retain its advantage of being first in cloud-based accounting by continually updating the look and feel of its product. This strategy allows Xero to remain competitive in the increasingly crowded cloud accounting app market. Other innovations by Xero include the addition of software integrations with other online solutions such as Dropbox and Paypal, which allow users to further streamline their accounting process.

Demand

Pricing and accessibility remain some of the most important factors for creating demand for an SaaS product. A product that is only available on a small number of cloud platforms will have difficulty generating high demand just as much as a product that’s overpriced. The cloud services market currently has many players, so SaaS providers typically must offer their solutions on many platforms to improve market penetration. Providers achieve success by charging a higher price and selling their service on larger platforms that require a lower commitment from their users.

This delivery model attracts users who are more concerned about making a long-term commitment with a new cloud platform before they decide if they like the product, even with a high initial price. This is especially true with users who have already spent a significant amount of time tailoring their preferences on their current SaaS subscription service. An SaaS developer that fails to provide a truly innovative product runs the risk of its potential customers remaining with what they already have or using nothing at all.

SaaS customers generally obtain applications from a platform that charges a subscription fee by the month or year. These platforms usually use tiered subscriptions rather than fixed subscriptions, meaning the fee is determined by factors such as campaigns, clicks and users. MailChimp is a typical example of a tiered subscription service. This service launched in 2001, although it didn’t offer its “freemium” option until 2009. This delivery option provides users with greater access when they scale up their services. The freemium option was instrumental in increasing MailChimp’s user base from 85,000 to 450,000 within one year of its introduction.

Nearshore software development can help you become a hub of continued innovation for your company. Tiempo Development provides software engineering teams that specialize in agile development, which is well-suited for developing innovative products. Our team members routinely collaborate with their team managers to accommodate changes in user requirements. Contact Tiempo today to find out more about what we can do for you.