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You have the idea. You have the business model. You have the team. Should you build the platform? Or outsource it to another company?
A long time ago everyone created their own websites.
They had to update it, maintain it and patch the security for it. After a while, hosting companies saw a need and begin to build and provide the core technology to their regular customers. And thus, the market of serviced websites was born.
Today this has progressed to SaaS websites like WIX and Shopify. Now users can focus on uploading the items they want to sell and connecting this with their bank account; they no longer have to worry if the website renders properly on one browser or another, or if a particular worm will attack the site.
Plus, a countless amount of people are finding reasons to start an online marketplace. It is a prime time for the world’s tech innovators to test their ideas, and technology is helping create markets for various products.
Millennials are leading the trend with their increased openness to try unique and funky sites. Often these markets are more efficient than traditional avenues and hence allow for a healthy margin, thus helping the new marketplace flourish.
But a great business idea will go stale without proper execution and one of the main reasons many startups fail is because the company runs out of cash before generating sufficient momentum.
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It is important to be diligent about strategic spending and startups should be cognisant to build a budget with longevity in mind.
That is where using a Software as a Service model (SaaS) can be lifesaving for entrepreneurs who do not have a lot of money but still want to have a top quality online platform to run their marketplace.
What is SaaS?
Simply put, SaaS is a service model that moves the burden of technical deployment from the entrepreneurs to the SaaS provider.
Founders avoid the hassle of creating an online business platform from scratch and they can avoid the difficult task of deploying and maintaining the infrastructure.
Secure and stable platforms require highly skilled talent and resources, hosting fees, system backups, SSL certificates and compliance audits. Often, this requires a trained and specialized person that is often an unrealistic hire for a small-scale business.
SaaS providers centralize their systems and implement all technical aspects customers can achieve the desired economic targets, i.e. lower costs.
Organizations might take on a Do-It-Yourself (DIY) approach, but are then forced to achieve the same economies of scale as the SaaS company internally, and this may never happen.
Benefits of SaaS for ecommerce
Choosing a SaaS provides prompt and scalable Return on Investment (ROI — the profitability ratio resulting from an investment of some resource).
Efficient integration is guaranteed with the prevalent usage of an API (Application Program Interface) which provides a set of routines, protocols, and tools for building software applications in multiple channels.
Depending on the package, SaaS providers also offer front-end customization tailored to the business’s characteristic and style.
The short period of platform implementation in SaaS is a deciding factor in keeping an online business current and fresh.
Above all, cost effectiveness is the drawing card for many young businesses because most SaaS services provide significant deployment cost reduction and cheaper ongoing maintenance.
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Significant SaaS systems can be setup and maintained for less than US$100,000 in the first year, while using a DIY approach can costs millions of dollars and not produce a guaranteed outcome. All the while freeing up time for the entrepreneur to focus on the business model and growth.
Some things to know before choosing SaaS
SaaS solutions require mutual understanding between the provider and customer to achieve the desired outcome.
To deliver something viable, the SaaS company needs a clear overview of the startup business model, and the targets it aims to reach.
A quality SaaS provider will do its best to include a core set of features and reports for clients, but will require commitment to a contract term if more flexibility is requested.
On the same note, when using a SaaS service, the startup is entering someone else’s house and it is essential to respect the rules.
Understanding the level of customization the SaaS can provide and what changes are allowed is as important as understanding the concerns that may arise from the model.
Founders should know how the service handles data migration, compatibility of specific integration and reliable infrastructure in web connectivity.
The two sides need to establish a relationship built on trust; especially when handing verticals, rigorous data-security and real-time information in sensitive markets such as financial services, public sector and mission-critical manufacturing.
In conclusion
There is no one-size-fits-all when it comes to choosing a tech development model to build a business. Both SaaS and DIY possess unique and valuable points as well as challenges.
The SaaS model drastically lowers the cost of all technical aspects, which will be apparent when accounting for the price of creating, configuring, modifying, sustaining and operating the software.
The amount of time required to create the platform is also significantly shorter with a SaaS — in the order of weeks, even days compared to months with DIY.
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The benefits of SaaS allow businesses to focus on its core business model and strategies.
As with any emerging industry, SaaS is constantly evolving and improving to deliver the best service to the right customer groups. But, it serves as an appealing and smart option for young entrepreneurs with a limited budget who wants to make a low-risk entrance in the world of online marketplaces.
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About: Paul Cascun is a co-founder of Arcadier, a SaaS company that powers next generation marketplace ideas. Follow Arcadier on Twitter, Facebook, and LinkedIn for news and updates.
The post A Beginner’s Guide: Should I buy a SaaS for my startup? appeared first on e27.
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