How to Build a Modern SaaS Application Based on AWS: A Definitive Guide for Startup Founders
- What “a modern SaaS app” means
- How a SaaS development process looks like
- What challenges can you face when developing a SaaS product
- How building a web app on AWS can help you deal with these challenges
In 2022, the revenue in the software as a service (SaaS) market is forecast to reach $212.2 billion and grow at an annual rate of 9.1% during the next five years. The average number of SaaS applications used by organizations globally has been on the rise since 2015. Meanwhile, consumer SaaS keeps taking more and more space in our digital routine: Adobe Creative Cloud, Netflix, Figma, and Zoom are just a few popular examples.
These trends alone can be motivating enough to consider building a SaaS app. Pair them with almost limitless scalability, subscription-based revenue, and low cost of distribution enabled by the cloud, and you’ll get a perfect blend for the successful release of a new-level product.
Let’s get the ball rolling by discussing in more detail why SaaS development is something you as a startup should consider when hashing out a concept of your product.
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Why building a SaaS app is a good idea for startups
Different tech startup founders focus on different software types, industries, and audiences, but all of them have one thing in common — the desire to build a successful product. In a startup environment, “success” usually means the following:
- Attracting new customers and scaling a product fast
- Creating a predictable and growing revenue stream
- Reducing expenses
While cloud hosting isn’t a magic wand that makes every product a market winner, choosing a SaaS scenario can greatly improve your chances of success. There is a handful of reasons for that.
Consumerization of enterprise software
Enterprise software has long been synonymous with platform dependency, poor performance, and clunky user interfaces. But expectations and demands of B2B customers are in constant flux. People get the best-in-class experience when using consumer apps — why should they tolerate the flaws of corporate software?
Consumerization of enterprise software puts a B2B user at the center of workplace digital experience. Employees expect intuitive, fast, and agile tools, so corporate decision-makers are looking for software that meets these criteria. As a result, enterprise IT ecosystems are shifting from on-premise to SaaS since, in most cases, only cloud-based solutions ensure consumer-grade UX.
For startups targeting corporate clients, it means that SaaS enterprise products are more likely to meet the current demand of potential users. Ultimately, this leads to higher sales and revenues.
Subscription-based payment model
SaaS products enable a subscription-based payment model. For you as a startup founder, it translates into faster customer acquisitions. Unlike with traditional software, users of SaaS tools don’t have to sign multi-year contracts with a vendor and pay high up-front fees — without any guarantee of good performance or support. Instead, they can start small by opting for a basic package, get instant access to a service, and pay for it on a pay-as-you-go basis. Also, users can unsubscribe from a service at any time. They don’t risk losing much money, and all of it, taken together, makes SaaS products an attractive purchase.
On top of that, if you build a SaaS solution based on a multi-tenant architecture, the cost of setting up a new user will be relatively low. So, you’ll be able to attract new customers with a trial or a freemium model.
Low entry barrier
A SaaS product is relatively easy to build, maintain, scale, and distribute. All you need is your brilliant idea and a team of professionals with expertise in cloud development services, for example, in AWS web app development. “How come?” you might wonder.
When you follow a SaaS approach, your product is stored on the cloud vendor’s servers. You don’t need to worry about hardware, its purchase and maintenance. Also, most popular cloud vendors offer an entire ecosystem of tools for building a wide variety of solutions, from e-commerce to ERPs. So, the development process speeds up. Finally, sales get streamlined since there is no need for physical distribution — usually, users get access to services in a few clicks.
A subscription-based payment model allows you to create a stable and predictable revenue stream. Traditional software is usually sold like physical goods — customers make up-front payments and then use a product for a period a vendor can hardly control. With SaaS solutions, a user is charged monthly or annually, while a vendor sets the pricing policy and can monitor for how long a particular customer uses a product.
A subscription-based model is beneficial for both sides. Customers don’t need to pay a lump sum in advance for a product that might not fit their needs. Meanwhile, you as a product seller can change prices, get high profit margins, and attract new users using digital marketing techniques.
Innovation and agility
Building an app on AWS, a current market leader, or its less popular alternatives empowers innovation and agility unheard of for an on-premise setup. In the SaaS scenario, it’s much easier to keep your product relevant and accommodate it to new market conditions. You can roll out new features quickly, too, as the product is hosted centrally and has only one configuration.
SaaS startups have been garnering much attention from investors, including VC funds. According to PitchBook Data, this IT area got the highest funding ($3.62 trillion) from 2013 to 2021. And it’s no wonder. A SaaS business model is a road to regular revenue, customer satisfaction, and fast growth. Combined with the fast adoption pace, all these aspects make SaaS solutions an attractive find for investors.
Now that you know why a SaaS approach is the right choice for startups, let’s talk more about cloud-based products — what criteria they should meet and what benefits you can expect when building a web app using AWS.
What makes a SaaS application modern
A modern SaaS app is much more than a bunch of cool features. To fit customer needs, it has to meet a range of critical non-functional requirements, too. Let’s dive a little deeper.
Modern SaaS applications in a nutshell
Modern architectural patterns, operational models, and software delivery processes create a foundation for modern SaaS applications. When these aspects are properly implemented, you’ll get a product that:
- Scales up and down as necessary. Market conditions are changing all the time, and your product should do so, too. Whatever strategy you choose, be it rapid growth to millions of users or targeting a niche audience, a modern SaaS app must allow for easy adaptations.
- Has a global availability. A modern SaaS app is platform-agnostic. Users should be able to access it anytime, from any device and any location in the world with internet coverage
- Can manage petabytes of data. No matter what audience you target — enterprises or individual users — they’ll likely generate tons of data daily. A modern SaaS product should be able to handle it effectively, taking care of integrity and security.
- Responds in milliseconds. Modern SaaS products are fast. They should respond instantly to user inputs and provide real-time access to information. No one will use a web app that performs poorly.
Modern SaaS software development allows startups to innovate and adjust their business strategy to the changing circumstances while keeping the costs relatively low. These are four main reasons to choose the cloud-based approach when creating a new product:
- Increased agility. In SaaS development, there’s no hardware you have to take care of. Developers can focus on innovation, updates, and product enhancements instead of wasting time on maintenance.
- Developer efficiency. SaaS products are based on a microservice architectural approach. It speeds up the time to market and lets you release new features quickly. If you apply the right approaches and create the right design, there will be little to no risk of application failure.
- Reduced total cost of ownership (TCO). With a SaaS product, there is no operational maintenance and overhead. As a startup founder, you get a reduced product TCO.
- Improved ROI. App development on AWS or its alternatives allows product creators to get higher ROI compared to on-premise scenarios. For example, such services as AWS Lambda and AWS Fargate help users avoid over- or underutilization of cloud resources. They automatically resize storage volumes based on changes in development needs and workload.
Before you proceed with SaaS development, you’ll need to choose a deployment type for your product.
A modern SaaS app: 2 main deployment types
The choice of a deployment type for your product will depend on many factors: the kind of software you’re building, its target audience and market, security standards and regulations, etc. As a rule, you’ll end up with one of the following two options.
In a multi-tenant model, all your customers (tenants) will share the same environment — a database and supporting infrastructure. Also, all customers will use a single app version, though some level of customization is possible. The onboarding process is fully automated and can be completed with the help of self-service. So, your sales or support team won’t have to be involved. All these characteristics of multi-tenant SaaS make for fast scalability and update roll-out. This option is most popular as it fits a wide variety of cases.
If you opt for a single-tenant architecture, every customer will use an isolated database with supporting infrastructure and will have a unique version of your application. Customers will be able to fully customize the user interface of your product to match their needs. However, scalability will be limited since each installation will require professional help on your side. Following a single-tenant approach makes the most sense in strictly regulated areas like finances or healthcare. It’s also a good option if your target audience has extra security demands.
Why choose AWS for app development
AWS’s share in the cloud infrastructure market amounts to 33%, or more than the shares of its two closest competitors, Azure and Google Cloud, taken together. But if these numbers aren’t convincing enough for you and you still ask yourself, “Do I need AWS for app development?” these AWS benefits might guide you to the right answer.
The breadth of services and integrations
Besides the cloud infrastructure, AWS offers a wide range of services and features that simplify and accelerate the development process. Its developer tools, serverless capabilities, and integrated development environment allow startups to create an inspiring variety of state-of-the-art products.
Minimal entry cost and smooth scalability
With AWS, startups can build an MVP and run a proof of concept (PoC) with minimum investments. The pay-as-you-go approach lets you pay only for AWS services you use and only for the period you need them. After getting user feedback and/or funding, you can easily scale AWS cloud infrastructure up or down as necessary.
Clear pricing model
AWS has no hidden fees. For the majority of services, it does not bind you with long-term payment obligations or make you buy an expensive package just to access a single service in it. The pricing model is transparent. What’s more, it provides a lot of opportunities for saving costs.
AWS app development platform enables continuous delivery, which means it provides easy and quick options to automate deployments, releases of new features, and testing. What you get in the end is lower operating expenses.
Security and compliance
AWS ensures compliance with a variety of security standards and regulations, including HIPAA, GDPR, PCI-DSS, and NIST 800-171. Amazon keeps track of the regulatory environment across industries — in particular, healthcare, e-commerce, and finance — and updates its offerings.
How AWS helps deal with typical challenges startups face in SaaS development
Building a new product from scratch might be a bumpy road, especially if you have little experience in SaaS software development. Luckily, AWS will help you handle common challenges that startup founders struggle with.
If you want to bring your product idea to life, you have to understand the math behind it. AWS provides pricing calculator that helps app creators estimate the price for service configurations, considering all the specifics of their business case.
To use the calculator, knowledge of AWS services and some technical skills are required. So it’s better to engage AWS experts in this task. After they insert necessary information about the potential usage of cloud infrastructure, the costs will be calculated automatically.
Running a PoC
To grow a successful startup without the risk of wasting all the resources on a product no one actually needs, you have to run a proof of concept first. While this step is crucial and cannot be skipped, it’s important to make it as fast and cost-effective as possible. If you decide to build an app on AWS, it won’t be a problem.
AWS offers many out-of-the-box services that you can integrate instead of developing new solutions to resolve technical tasks and challenges from the ground up. Examples include Load Balancer and Auto Scaling Group, SQS and SNS, Kinesis and RedShift. Also, AWS provides a lot of ready-made reference architectures that can be adjusted to a specific project with just minor changes.
Fast transitioning from a PoC to production
Suppose running a PoC showed that your product matches market demand. At this point, some startup founders may face a scalability issue since not all PoCs can be turned into production-ready systems without rewriting a large portion of code. When opting for AWS app development, you can easily overcome this trouble.
AWS, in general, puts a strong focus on agility. It provides a lot of tools and services to help companies scale their products up and down smoothly. AWS Auto Scaling, Amazon RDS, and serverless services such as Lambda, API Gateway, Fargate, EventBridge, and SQS will make your transition from a PoC to live easy and fast.
Global market reach
AWS’s concept of Regions ensures the global coverage of cloud computing services. You can run your app worldwide with no need to look for data centers in different geographical areas. Also, infrastructure as code (IaC) allows product creators to “clone” product infrastructures and set up new environments in different AWS Regions quickly. With AWS app development, you can place your infrastructure in the area close to your target audience, reducing latency and improving app response time.
All these factors facilitate business growth. So, if you have an ambitious goal of hitting a global market, building an app on AWS will be the right decision.
Dealing with data protection regulations
Ensuring compliance with data protection regulations is a pain in the neck for many startup founders. A privacy regulatory landscape is complex, and adhering to some rules may be challenging, especially if you are just starting off. For example, GDPR restricts the transfer of data belonging to EU citizens to countries outside the European Economic Area.
If you choose AWS for app development, dealing with all these privacy laws and policies won’t be much of a burden. Amazon constantly monitors laws and regulations all over the world and provides its clients with the tools and services they need to operate securely. For example, you can quickly create typical AWS resources using IaC and deploy them in AWS Region(s) permitted by the law of your target country.
Audit and governance
Startup founders often put all their effort into marketing an innovative product they’ve created, while other tasks fall to the bottom of their to-do lists. The administration of cloud resources is no exception. But fortunately, AWS solves this problem by automating the audit and governance of SaaS product infrastructure.
When building an app on AWS, you can use AWS CloudTrail — a service for tracking and recording all the activities in a cloud account. It allows you to set up alerts when something goes wrong, for example, when a user exceeds permissions. On top of that, with AWS CloudTrail, you can grant external auditors access rights to the usage data, which can significantly speed up the ISO 27001 certification procedures.
Main stages of building a web app on AWS
Tech startups are trying to disrupt business-as-usual with their innovative apps — something never offered before. But while all the products built by startups are unique, their development processes are similar. They usually include the following key phases:
- Doing market research and shaping an idea
- Hiring a development team
- Deciding on app features and architecture
- Choosing a tech stack
- Developing a PoC
- Developing an MVP
- Testing a product
- Launching an app and further iterations
AWS app development is based on similar logic. But to detail a journey to SaaS, Amazon experts created four frameworks, each targeting a different company profile. One of them, UnicornExpress.com, is designed specifically for businesses that want to create an AWS-based solution from scratch. Here are the stages it outlines.
Startups build unique and innovative products, so there is neither an existing market for them nor an established target audience. The first stage of the UnicornExpress.com framework focuses on creating the fundamental projections for all core aspects of a startup’s business model. This includes accessing the opportunities, identifying the target segments, developing a business concept, deciding on a monetization model, and evaluating the required resources.
Product strategy and roadmap development
At this point, startups have to dive deeper into defining the product strategy and how it matches customer needs and wants. While founders may be tempted to proceed right to the product creation, AWS experts insist that this stage is crucial for future business growth. Without a well-thought strategy, it can be hard to meet market demand in the long-term perspective.
During this stage, you need to develop a user persona and gather customer data to get insights into their expectations. Then you design an onboarding experience, identify legal and security requirements applicable to your product, and decide on pricing.
Minimum viable service (MVS)
The third phase of AWS app development allows startups to accelerate time to market and test key assumptions about their product. That’s when you should think about the first version of your app: what functionality to include, who the early adopters will be, how to gather customer feedback, etc. In addition, you need to lay out core SaaS principles for your MVS. Decide what goals you want to achieve within this iteration and what compromises you’re making at this point.
At this stage, startups have to focus on their go-to-market (GTM) strategy. Usually, most of the core activities are related to marketing and sales. They include customer acquisition and retention, in-product communication, knowledge management tools, and expansion-selling initiatives. Here a startup must update customer journey maps, establish frameworks for new customer acquisition, set customer retention and growth objectives, and develop marketing campaigns.
Our experience in AWS app development: Key takeaways
Romexsoft is an AWS consulting and managed service provider. With an extensive experience in AWS app development, we help startups create modern SaaS products that have the full potential to reshape target markets. Below we share proven tips on building an AWS serverless app that every startup founder must know.
When building a tech startup, paying attention to business aspects is no less important than developing a cutting-edge product. Here are the key things to remember.
Make sure there is a product-market fit
You won’t be able to get funding and grow a successful business if there is no market for your product. Ensuring the product-market fit must be the number-one task for startup founders. Before spending resources on the AWS app development, double-check that a certain group of people will want to buy your product and that it can truly satisfy those people’s needs.
Use simple metrics for your SaaS product
For SaaS startup founders, it’s not always obvious what metrics they should track to know if they’re moving in the right direction. So, they risk focusing on trivial things and missing the critical numbers. As we see from our experience, it is essential to monitor the following metrics when building an app on AWS:
- Leads: how many people are interested in your product?
- Conversions: how many leads complete the desired action (e.g., subscribe to your service)?
- Annual recurring revenue: how much revenue can you expect based on annual subscriptions?
- Retention: how many customers have stayed with you in a given period?
Depending on your business case, you may need to track other metrics, such as time to value or bounce rate.
Focus on a repeatable sales process and sales scaling
At the initial startup stage, founders often treat every customer as if they’re the only people who will ever buy their product. Sometimes, the entire product strategy might be overhauled just to satisfy the expectations of early adopters. But that’s not right since sales cannot be chaotic. To build a high-growth tech business, startup founders must put much effort into creating a scalable and repeatable sales process.
Get used to fast decision-making
AWS app development empowers a high level of agility. Meanwhile, market conditions are never stable. As a startup founder, you have to accept the new reality of fast decision-making. Of course, you don’t have to transform your entire product vision after every minor market fluctuation. Be ready, though, to make quick decisions whenever necessary.
Not all startup founders are developers. But if you want to build a modern SaaS app, you need to understand at least the basics of the technical side of the matter. Here are the main recommendations we can give you.
Keep an eye on multi-tenant SaaS
As we mentioned, the choice of a deployment type for your product depends on many factors, including target industry, security standards, and legal regulations. At the same time, multi-tenant SaaS is an optimal and future-proof option that suits most cases. It will allow you to capture a large audience, update your software frequently, and scale fast.
A single-tenant SaaS might be a good idea only if you build a niche product for up to 20 customers. Otherwise, software deployment and maintenance might give you a headache.
Find an AWS consulting provider
AWS provides extensive documentation on its services: each tool or feature goes with detailed guidance, FAQ sections, and manuals. But building an app on AWS still requires professional assistance. You need someone with solid expertise in AWS app development to get technical advice for your specific case, address complex security issues, cover infrastructure management, and many more. So finding a reliable AWS consulting provider is paramount for every startup.
Focus on features and value for your customers
When striving to build a modern app, some startup founders pay too much attention to technologies while product features and customer value fade into the background. Technologies do play a crucial role in the success of modern tech startups, but such logic is still fundamentally wrong.
To build an app that customers will want to use, you have to understand how the choice of a particular technology impacts your product. Customer value must always be a top priority — a tech stack just supports it. Not the other way around.
Don’t underestimate the role of databases
The way the data is managed will play a crucial role in the performance of your SaaS app. It, in turn, will influence the customer experience. Having a reliable database is essential for your startup’s success.
Unfortunately, not all founders know this. Often, databases are developed by engineers without relevant skills and experience. As a result, startups end up with oversized or poorly structured databases, which affects the product quality.
To avoid this trap, hire professionals with a proven track record of completed projects. Experienced specialists will help you create a well-structured database of an optimal size that will meet all your project requirements.
Tips on building a web app on AWS
If you decide to build your product on AWS, keep in mind the following recommendations:
- Make the right choice of AWS services. The AWS ecosystem is huge, so it’s easy to get lost in all its services, tools, and features. Your AWS consulting provider should help you figure out what AWS products will fit your SaaS application best.
- Estimate all the costs. You need to calculate the cost of your SaaS environment and every tenant within it. To make your business profitable, you also should understand the cost-effectiveness of different product features. Your business strategy and pricing model must be based on these numbers.
- Prepare a disaster recovery configuration. Failures and downtimes can happen with every system, so preparation is king. AWS provides multiple resources to help its clients build a disaster recovery plan and ensure product resilience.
- Build an app monitoring strategy. To effectively manage your app, you need to have a robust monitoring strategy. It’ll help you prevent issues and respond quickly should anything come up.
These tips work well for most tech startups building an app on AWS. But the list is far from over — there may be other recommendations that depend on project specifics. So if you need more detailed advice, don’t hesitate to reach out to an AWS consulting provider.
How Romexsoft can help you build a SaaS app based on AWS
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How to build a modern SaaS application FAQ
Building a SaaS on AWS involves several key considerations. These include understanding the AWS services and tools that can be leveraged, planning for scalability, ensuring global availability, managing large volumes of data, and ensuring fast response times. It also involves understanding the cost implications, ensuring compliance with data protection regulations, and planning for audit and governance.
An example of a SaaS application developed on AWS could be a cloud-based project management tool. This tool could leverage AWS services such as EC2 for compute power, RDS for database management, S3 for storage, and CloudFront for content delivery. The development process would involve planning the architecture, setting up the AWS services, developing the application, testing it, and then deploying it on AWS. The application could then be scaled up or down as needed using AWS's scalability features.
Rapid SaaS development on AWS involves leveraging the wide range of services and features that AWS offers to accelerate the development process. This includes using AWS's developer tools, serverless capabilities, and integrated development environment. It also involves taking advantage of AWS's scalability features to quickly scale the application up or down as needed. Additionally, AWS's clear pricing model and pay-as-you-go approach can help keep costs under control during rapid development.
Building a SaaS on AWS offers several benefits. These include access to a wide range of services and integrations, minimal entry cost and smooth scalability, a clear pricing model, continuous delivery, and strong security and compliance features. AWS also helps address common challenges that startups face in SaaS development, such as calculating total cost of ownership, running a proof of concept, transitioning from a proof of concept to production, reaching a global market, dealing with data protection regulations, and handling audit and governance.
It's crucial to keep track of certain metrics to ensure your SaaS product's success. These include the number of leads (people interested in your product), conversions (leads completing a desired action like subscribing), annual recurring revenue (expected revenue based on annual subscriptions), and retention (how many customers stay with you over a given period). Depending on your business case, you might need to track other metrics such as time to value or bounce rate.