What is SaaS? How it works, and when it makes sense to build one

SaaS stands for software as a service: a program that lives on the internet, that you use in the browser or an app, and that you pay for while you use it, usually monthly or yearly.

What sets it apart from older software is not technical, it is who is responsible for what. With SaaS you do not buy a copy or install it on your computers: the provider runs it on its servers, updates it, backs it up and keeps it available. You sign in with your account and work.

Much of the software a company uses today already works this way: email, online invoicing, the CRM, video calls or the online store.

SaaS can also be custom: when a company builds its own product to sell by subscription to others. That is the case at the end of this guide.

For processes that work the same way in any company, SaaS is usually the best buy: you start the same day, you maintain no servers and you get improvements without lifting a finger.

What to check before signing up for one:

• What it costs as you grow: a per-user price that is low today multiplies with every person who joins.
• How you get your data out if you ever switch: in what format, and whether the history comes with it.
• How well it fits your process, and which part you would still be handling in Excel.
• Whether it connects to what you already use, such as your ERP or your invoicing.

When the answer to the third question is “hardly at all”, the SaaS is making you change exactly what sets you apart. That is where a custom tool, connected to everything else, usually works out better.

From the outside a SaaS product looks like a screen. Inside, what makes it a product rather than just an app is everything that lets many customers use it at once and pay for it:

• Sign-up and accounts: each customer signs up on their own, with email or Google.
• Separation between customers: each company sees only its own data, even though they all use the same system.
• Subscriptions and recurring billing, with free trials, plan changes, discounts and invoices.
• A panel for the customer to set up their account, and another for you to run the business.
• Role-based permissions inside each account.
• Updates that ship without interrupting anyone.

MenuFacil, a QR digital-menu SaaS for restaurants, is a complete example: the restaurant signs up with Google or email, builds its menu, prints its codes and runs its tables from a panel; billing is per location rather than by tier, and prices and currency change with the visitor's country.

The hardest part of a SaaS product is rarely the main screen. It is usually billing: trials, discounts, several currencies and complimentary accounts all have to coexist without errors on every invoice.

Many companies have a process they have mastered and that other companies in their industry would pay to use: a way of quoting, of following up on a service or of organizing an operation. Turning it into a SaaS product is a way to sell that know-how more than once.

The signs it is worth exploring:

• You already solved it for yourself, and others ask you how you do it.
• The alternatives out there are generic or built for another country.
• You can say in one sentence what problem it solves and for whom.
• You have a way to reach the first customers: your own network, your dealers or your industry.

The sensible way to start is in stages: first the part that solves the main problem, in production and with real customers, then the rest. It is the same logic as an MVP, and it avoids spending on features nobody will use.