In the current market, businesses are looking for more creative ways to generate revenue. One of the most prevalent ways of creating a new source of income for businesses and companies over the internet is by creating a Software as a Service (SaaS) product.
This method has become the option of choice for several companies. It is a brilliant software distribution model, that can be started as something very small and expanded to the enterprise solution.
What is a Software as a Service (SaaS) Product?
SaaS can simply be described as a software licensing and delivery model whereby the software is licensed and distributed on a subscription basis and is centrally hosted. In opposite to standard applications distribution model - sold once and for a higher price - this option gives us much more flexibility and other advantages.
There has been a debate on whether going SaaS is a good option for companies. Despite the fierce debate, and looking at the biggest companies on the market, the creation of a SaaS solution is a great option for established businesses who are confident in the demand for their services.
When you are a consulting company and offer some specialized knowledge to your clients on a one to one basis, you can create a product out of your expertize. This product can be used by hundreds or even millions of people simultaneously, which is practically not possible with consulting as a service. This gives you enormous opportunities for growth and an increase in revenue due to the larger market.
Examples of SaaS products
As mentioned earlier, there has been significant growth in this industry. Potentially thousands of successful SaaS companies are already making significant steps in the industry. Let me look at some of the most notable SaaS Companies/Products in the market.
Stripe is a payment processing company that rivals the likes of PayPal, Flint, Authorize.net, and Ayden. The company started with a fair amount of mistakes making them have a pretty rocky beginning back in 2014. They, however, resolved most of their problems.
They are a good option to online merchants looking to offer several payment options to their customers. Stripe boasts of some of the lowest rates in credit card processing transaction fees. Arguably, the success of this SaaS product is based on their amazing customer support. Stripe was valued at around $20 billion in 2018.
Have you ever participated in a Virtual Team? Worked online with a bunch of other professionals from other regions? If not, then you probably do not know about Slack. However, if you have, chances are you have worked with Slack.
Slack is a messaging app designed to ease the communication between colleagues regardless of their platform. This is a great tool for startups, especially remote teams looking to maximize communication and teamwork. It offers a free and paid version. Slack is valued at around $20 billion.
Github is arguably the largest SaaS product in the software niche. Developers, Teams, and Companies use Github to collaborate and build amazing software.
Github is a free open source online repository that allows people to fork and contribute to over 30 million projects. This SaaS product was founded by a 33-year-old college dropout and later sold to Microsoft for $ 7.5 Billion.
Who uses SaaS products?
SaaS has greatly impacted on the human interaction sector. Good examples are companies mentioned above, where two of the three are geared towards human interaction. This implies that anytime your business seems to involve a lot of one to one customer interaction, you should start thinking about how SaaS can come in.
A lot of small and mid-size companies use SaaS too. Even software development companies like ours, don't build a customized CRM or project management software for our needs - we use Zoho and Trello, which are almost free and bring a lot of value for us.
How to turn a consulting company to SaaS company?
This is a popular debate online. With numerous unsolved answers as to how a consulting firm can be turned to a SaaS company. We can imagine a lot of scenarios of such a transition. Some of them are our actual case studies, so let’s discuss them.
You are a consulting company in revenue optimization field. You hire multiple great consultants and pay them on a monthly or hourly basis.
Are they focusing 100% on their core responsibility, which is to optimize revenue, or they are doing a lot of repetitive tasks, analyze big excel files and return some similar solutions over and over again?
This is a point, where you can start your SaaS transition. Beginning by automation of repetitive tasks and before your potential client reach any consultant, he will get reports based on his data automatically.
So instead of turning the whole company into a SaaS platform, we can do it step by step, task by task, add it to your platform and make available for a scalable number of users.
You have a consulting company, but you found a niche which a lot of companies look for support. Let’s say it is some calculation, which your clients must do every month. You have some template ready, consultants know what to do and each time a client comes, one of the consultants must spend 4 hours doing calculations for him. So practically, this 1 consultant can serve 2 clients per day.
At this point, you can say enough - let’s build an application, where clients will pay on a monthly basis for this service and can do it on their own.
You build the application, make it work and after a couple of weeks/months, you can offer the same service, without any consultants involved, to a much bigger number of clients and scale it as fast as you want to. At this point, your consultant can work on much more profitable and creative tasks.
You found a perfect idea for a small tool for your industry, which will also help your consulting company, to solve some problems much faster than anybody else. You can take it in 2 ways:
1. Build a tool, use it only within your company and make your consultations better / faster / cheaper - which will bring your company X amount of money saved every year.
2. Build a tool, turn it into the platform and make it available for the whole industry for a monthly payment of Y amount.
Which is better? It is up to yo you, this is your business, we are only building software.
Hope this couple of examples along with the rest of the article help you to understand better, how consulting companies can benefit from a SaaS model of software distribution.
If you have any questions or want to discuss this or any other topic, feel free to use the form below to contact us.