As the forecast shows, the global software as a service (SaaS) market will significantly grow between 2020 and 2025. The United States is predicted to experience the largest increase, with the market size projected to rise from 92 billion euros to 191 billion euros by 2025.
Migrating to the SaaS business model involves more than simply transferring your app to the cloud. Each migration is unique and tailored to the business case. Companies encounter market challenges and competition, along with their own technical and legacy constraints. Despite differences, key principles shape the migration strategy. Adhering to these guidelines ensures a successful SaaS migration.
Why Do Businesses Migrate to SaaS?
Traditional on-premises architecture involves businesses installing software on their own computers, servers, and data centers. In contrast, SaaS enables companies to host software centrally with a cloud provider.
It gives organizations the flexibility to easily incorporate new capabilities and applications without essential expenditures on infrastructure or IT personnel. You don’t have to worry about buying a bunch of software licenses either because SaaS works through a convenient monthly subscription. That helps reduce upfront costs.
Another benefit is that an organization doesn’t have to cope with a complex software upgrade cycle. The cloud provider takes responsibility for delivering new features and security updates regularly, sparing companies from this time- and resource-consuming process.
Challenges of SaaS Migrating for Businesses
When migrating to SaaS, businesses should be aware of and address certain challenges:
- Interoperability: Integrating SaaS with existing tools and legacy systems can be difficult depending on the compatibility of different applications.
- Workforce: Shifting to SaaS means relying on a cloud provider for software and infrastructure maintenance, which can require change management efforts to help IT teams adjust to their new responsibilities.
- Dependable connectivity: SaaS relies on internet access, making it necessary for users to have reliable connections. Functions that require low latency and quick response times may face limitations with SaaS.
- Dependence of a particular vendor: Businesses often stick with their initial cloud provider, so it’s crucial to choose a trustworthy and stable provider that can serve as a long-term technology partner.
- Security measures: Organizations new to cloud computing and SaaS must establish robust data security policies to protect critical information. While cloud providers play a role in security, businesses are responsible for their own policies, configurations, and assessments, requiring clear communication with providers about roles and responsibilities.
- Transition budget: Moving data and processes to a new application and training staff on the new system can incur costs, despite the long-term savings of the SaaS model.
How to Handle These Challenges?
Step 1. Prioritize Business Goals before SaaS Migration
In the context of large-scale SaaS migration, it’s essential to acknowledge that it extends beyond a purely technical solution. Instead, the decision should be rooted in a robust business case that takes into account diverse factors.
Prioritize a business mindset over technical considerations. Start by aligning with your business strategy and goals, rather than rushing into the technical aspects. Your business needs will guide the path and determine the top priorities for your SaaS project migration.
When developing your strategy, concentrate on essential questions that reveal the vision of your future product:
- How can SaaS accelerate business growth?
- Which segments are our primary targets?
- What are the size and characteristics of these segments?
- What tiers of service will we need to provide?
- What service experience do we aim to deliver?
- What is our pricing and packaging strategy?
Experienced individuals familiar with SaaS migration understand that the answers to business-oriented questions often shape the responses to technical inquiries, such as:
- How do we ensure tenant data isolation?
- What is the best approach to connecting users with tenants?
- How can we prevent noisy neighboring conditions?
- What is the strategy for conducting A/B testing?
- How do we handle tenant load-based scenarios?
- Which billing provider is most suitable?
Step 2. Plan your SaaS Migration Process
- Performing a SWOT analysis: It is crucial when documenting a migration project. It provides a comprehensive overview of strengths, weaknesses, opportunities, and threats across operational, business, and technical aspects. This analysis plays a vital role in developing a solid strategy for transitioning to the SaaS model.
- Road mapping: Evaluate the current architecture and application capabilities to understand the scope of work. Use research, analysis, and their outcomes when planning to create a roadmap that estimates the necessary effort for migration.
- Design: Determine if a complete redesign of the existing architecture, database, and codebase is needed. Integration strategy is crucial here, aiming to minimize customizations to the SaaS application and instead encourage teams to adopt built-in best practices by adjusting their processes.
- Change management: Implement change management practices throughout the migration process. Training and feedback loops play a vital role in increasing the adoption of new systems. This stage can significantly impact the success of the SaaS migration.
- Performing a pilot migration: It is an effective way to test your strategy and estimate user satisfaction with the new system. Conduct thorough testing and quality assurance during the pilot migration to identify and address any potential issues, ensuring a smooth transition.
- Data migration: Once analysis, planning, and testing are complete, move forward with the implementation and deployment of the migration process, including the transfer of data to the SaaS environment.
Step 3. Leverage metrics and analytics
Make the most of metrics and analytics to evaluate the performance of your SaaS business. Numerous metrics are at your disposal, but the key ones to focus on are:
- Monthly recurring revenue, which represents the dependable income your business generates each month.
- Customer churn indicates the percentage of customers who cancel or do not renew their subscriptions.
- Annual recurring revenue, which provides a prediction of your SaaS project’s annual income based on existing subscriptions.
It’s important to note that while metrics themselves won’t solve any problems that may arise, they serve as a powerful tool for making well-informed decisions. By analyzing these metrics, you can gain valuable insights into your business performance and take appropriate actions to address any challenges or capitalize on opportunities.