Rate this article
Thanks for rating!

Making a foray into SaaS product development seems like a license to print money for both startups and established businesses. The rationale behind this craze is simple: according to Gartner, the global public cloud end-user spending is slated to mint almost $600 billion in 2023, with SaaS remaining the largest segment.


Composability, flexibility, and 24/7 accessibility make SaaS products a mandate for businesses that want to thrive through disruption and prevent a headlong tumble into the red. So, if you want to benefit from the steady velocity of software-as-a-service, our comprehensive guide on SaaS product development is here to answer all of your questions.

What is a SaaS product?

Software as a service refers to a software distribution model that is hosted centrally on the cloud and grants users instant access to an application, usually on a paid-subscription basis. Users can reach software as a service products from multiple devices at their convenience, provided devices have an internet connection.

Time to ride the wave: why develop a SaaS product?

As digital transformation initiatives grow among companies, businesses are now more inclined to embrace composability over bulky, ironclad architectures. As a result, 48% of companies consider cloud investment to be the table stakes for the coming years.

SaaS solutions have grown in demand, further driven by the increasing costs of on-premise architecture. By 2029, the global Software as a Service market size is projected to reach $883.34 billion.

But despite the high demand, the SaaS market isn’t oversaturated when it comes to industry-specific solutions. The opportunity for vertically focused SaaS has reached its sweet spot, allowing businesses to go deeper and offer laser-focused solutions targeted particular niches. As long as the market gap for vertical SaaS exists, companies have a once-in-a-lifetime opportunity to blaze a trail with tailored solutions.

SaaS development challenges may pave a bumpy road to success

Building a perfect SaaS product requires a product-first approach, thorough market sizing, and hands-on expertise in cloud-based development. But the more challenges you overcome, the more you want to conquer the market with your product.

Delivering value to customers

The SaaS industry grows exponentially and so do the customer’s expectations. No matter how innovative, feature-packed, or aesthetically pleasing your software solution is, misalignment with your target audience will take its toll.

To overcome this challenge, you should never skimp on conducting market research and analyzing your target users. These will allow for a deep dive into the customers’ requirements, goals, and expectations. A customer-first product strategy is what stands you out among competitors and paves the way for a value-packed SaaS product with long-term value.

Service mindset

It’s not enough for your solution to cover the needs of your customers. To strike it rich, your product has to create an impactful experience that develops long-term loyalty. A product-first, service-oriented mindset is what enables you to create that indelible imprint on the user’s mind.

A service-first mindset encourages your product team to thoroughly understand the specifics of the project, the limitations of your product, its current goals, and potential areas for improvement. Everything that can possibly impact the value of the solution should come into the equation.


A SaaS product development process is a journey of evolution. As your solution gains traction, it grows an impressive customer base around it. To accommodate new users, your software requires a scalable, easily adjustable architecture.

Therefore, it’s crucial to build a strong foundation early on to handle larger volumes of business with less disruption and cost. Modularity, minimized latency, and system resilience will help you grow pain-free and with less cost.

Information security and privacy

Unlike traditional software, SaaS applications do not have a corporate-security perimeter of firewalls around them. They need a whole lot of security configurations, including encryption, access management, incident response, and more to keep hackers at bay.

Also, as this software distribution model often targets a wide audience across geographies, the challenge of meeting local data regulations, industry-specific compliance requirements, and other data standards turn SaaS product development into a never-ending chase.

Knowing the security landscape of your target market and an enhanced focus on data security from the get-go will prevent costly violations and keep the data of your users safe and sound.

Tech talent shortage

According to statistics, 81% of organizations scramble to fill in the tech talent gaps, encountering a shortage of developers. Due to the competitive and scarce hiring market, finding and employing a local product development team costs business owners time, money, and other valuable resources that a company may not have an abundance of or be willing to risk.

To ease the strain, many companies resort to SaaS outsourcing which offers more flexible models for building development teams. Along with larger talent pools, companies can tap into unique product expertise and accelerate time to market thanks to the high availability of outsourced talent.

Overcome the complexity of product development with us

4 surefire approaches to building a SaaS product

By 2026, business leaders expect half of their revenues to stem from products and services that haven’t yet been created. Software as a service products, among other revenue streams, can put companies on track to increased growth, provided you know how to wrap your arms around this venture. Below, we’ve curated pillars of a successful SaaS development process.

Rapid test-and-learn cycles

Customer feedback is often deemed to be an input that forms the basis for product requirements. It’s important to establish a deep understanding of customers’ pain points and make them the heart of your software development process.

From ideation to post-MVP improvements, it’s crucial to iterate based on the voice of your customer before making a full-fledged product. This approach is 101 in Agile, allowing companies to test with real customers and learn what needs to be improved. This way, you build around knowledge, not tasks, and establish a continuous cycle of improvements.

Capitalizing on existing digital and data assets

If you’re an established company, chances are you already have all the necessary ingredients to build a value-packed product that targets the needs of your customers. By tapping into existing digital and data assets, you can uncover new opportunities based on customers’ previous interactions with your business and seize them to reduce your costs and effort of development.

To craft products on the back of the existing assets, SaaS companies need a complete and transparent data infrastructure where no silos can stand in the way of innovation. Once isolated, data points become the legacy of select departments and cannot be leveraged in full to create a comprehensive data view. Also, you might need to fill in the data gaps or enrich proprietary data with third-party resources to make it exhaustive for a new product.

Planning for scale

Easy, on-demand scalability is what makes SaaS platforms emerge from the pack. Building with scalability in mind requires a dynamic and detailed roadmap that matches the pace of changes and allows the team to pivot with ease. Unlike static planning, dynamic roadmaps are designed to be adaptive, thriving on real-time feedback from users in order to innovate quickly.

From a tech standpoint, a growth-ready product should rely on flexible architecture based on microservices and APIs that allow for simple interfaces to data, algorithms, and processes. Decoupled architecture is what enables the team to deploy features independently and dynamically allocate resources to services as needed.

Being responsive to customers’ actual needs

Product development is never final. To be successful, your SaaS solution should constantly evolve to match the shifting needs of your customers. Baking tracking and analytics into the software allows you to gain a better view of both high-value and low-value features, doubling down on what matters the most for your customers.

Tracking tools help your product team measure new releases in terms of performance and positive customer response, making your solution customer-first and value-packed.

Set up your product development for success

From thought to bought: navigating the stages of SaaS development

A typical, Agile-first development process encourages development teams to iteratively execute the product vision, breaking each challenge down into smaller, solvable problems. The SaaS development process typically follows a similar playbook and goes through ten concurrent phases.


Market research

Everything starts with an idea, but not every idea is worth pursuing. So before you march forward, it’s important to estimate how your product idea aligns with customer needs, industry trends, and market demand. You should also understand how your future product stacks up against competitors and what makes it stand out in the saturated market. Consider involving a focus group of real customers in the research to gather qualitative data and in-depth insights that would reveal true customer demands and opinions.

Product ideation

With market data on hand, you can further shape your product idea through a prism of different stakeholders steeped in customer needs — from a SaaS product manager to a developer to a product designer. An ideation cohort can provide their unique perspectives on how customer insights can be implemented into the product and help you adjust the prototypes correspondingly.

Ideally, participants should be diverse, with representatives from each department or business function to give their relevant experience. At this stage, you and your product team generate and filter out ideas, prioritize user insights to identify opportunities, and group ideas into distinct buckets that may end up in a future product roadmap.

Ideation sessions should also revolve around focus groups, user surveys, and customer interviews whose input can later be aggregated and analyzed. If you are building a SaaS product on top of an existing business, you should pull in user feedback from existing customers, including sales calls, marketing data, and data from other touchpoints. This helps you gain a baseline understanding of the real-world users and potential new customers.

Determining business requirements

Once you’ve gathered customer requirements, it’s time to think of how this software project can bring you closer to your business goals. Business requirements define the strategic path of the project and describe what a system or a solution should do and why. They give a high-level, yet detail-oriented understanding of the scope of your solution, its overriding goal, and project constraints.

Business requirements should be agreed upon and reflected in the Business Requirements Document. Keep in mind that requirements gathering is a dynamic process that can bring new variables into the picture. Therefore, make sure to make space for future requirements gathering early on in the development lifecycle to keep the scope of the project easily adaptable.

Defining the project scope

A well-defined project scope keeps the project on track and ensures all deliverables are turned in on time, within budget, and up to your expectations. The level of detail on your project scope statement is directly linked to the complexity of your project. Either way, it should consist of three major parts, including project justification, main deliverables, and project objectives.

A scope statement also provides a detailed outline of all aspects of a project, including timelines, key stakeholders, constraints, and other key elements of the process.

Architecture design

A well-balanced SaaS system architecture is the backbone of a scalable and reliable software-as-a-service solution. Typically, this is dictated by your customer requirements and business goals. For example, a multi-tenant SaaS architecture is a great option for commercial software products as it’s maintenance-free for the customer and requires less upfront infrastructure procurement.

You can also base your solutions on a single-tenant or a mixed-tenant architecture that allows for more dedicated resources deployed for each customer. Overall, the tenancy model makes no difference for the functionality of an application, but it impacts other aspects, such as the number of concurrent customers and operational complexity.

Software as a Service

You can also use a mix of these models to cover the diversity of customer needs. For example, the basic tier of the solution can run on a multi-tenant architecture, while customers with higher performance needs can be billed for a dedicated service tier based on a single-tenant delivery model.

Choosing tech stack

The tech stack for SaaS solutions usually includes client-side technologies, server-side technologies, and cloud services. The right combination of tech will secure your product well into the future and enable it to evolve and scale with fewer costs. When choosing your IT stack, our team takes into account your existing IT suite, the complexity of your software, and maintenance requirements.

Developing an MMP

Once we lay the groundwork for product development, our team proceeds with identifying high-value features and setting priorities for feature releases. Must-have features are then incorporated into a Minimum Marketable Product or MMP, an upgraded version of an MVP, a product version with minimum functionality that should still be enough to enter the market and gain traction among end users.

MMP development is also preceded by prototyping whereby our UX/UI design teams create a visual representation of your MMP and prepare the final layouts for further development. At this stage, each MMP feature is also thoroughly checked through continuous testing cycles that enable our team to obtain critical feedback earlier and ensure faster deliveries.

App development

Your SaaS product lifecycle follows through with an MMP release that will allow your team to collect valuable customer feedback and chalk out a roadmap for product enhancement. At this stage, your product teams add good-to-have functionalities into the SaaS offering, iterate on an MMP based on the user sentiments, and transform the application into a full-fledged solution ready to offer a plethora of features.

This stage also benefits from continuous integration and testing cycles that enable your team to evaluate the quality of each deliverable as part of a continuous delivery process, by testing early and often. This testing culture determines the quality of your releases, so make sure your team doesn’t skimp on this part.


New features and updates are delivered continuously in small batches which allows your development team to easily troubleshoot issues and release as often as you need. Continuous delivery cycles also increase the speed to market as your team doesn’t have to pause development for releases. As a result, users can enjoy an uninterrupted stream of improvements, with daily enhancements and feature fixes.

Maintenance and upgrades

The development of SaaS products is never final. It’s a continuous engine of improvements delivered through an ongoing effort of your support team. Your product management SaaS unit should monitor customer behavior, unearth valuable insights, and communicate them to a support team that can then transform this feedback into a software upgrade plan.

Moreover, you need a dedicated team for maintaining your SaaS product, ensuring it delivers an impeccable experience to the users and can accommodate the growing workloads.

Get your SaaS product driven from A to Z

Hiring well isn’t enough, but building an effective SaaS development team is

To build a SaaS product with long-term potential, you need more than just a development team. A close-knit, autonomous squad of high performers with a business mindset and product vision is more likely to fit the bill, holistically growing and elevating your product idea. Here is what a well-balanced product team structure looks like.


Product manager

A SaaS product manager is in charge of the entire SaaS product management process, tackling product-related tasks and communicating product strategy to the engineering, design, and marketing teams. Together with product managers, SaaS product managers oversee the entire cycle of product development, making sure the final deliverables meet business and customer needs.

Project manager

SaaS project management differs from regular software development projects, but you still need a person with an all-seeing eye that can shepherd the project to completion. Project managers oversee the project from start to finish, keeping an eye on the budget, deadlines, and overall project progress. They are doers who maintain processes for changes in the project and coordinate complex project dependencies and team resources.

Business analyst

Business analysts are field workers who strategize your business idea, conduct market research, and participate in defining the scope of your project. Without thorough business analysis, it’s impossible to elicit project requirements and prepare detailed software documentation for the successful development and delivery of the product.

Solution architect

These specialists come on stage during large-scale projects and map the overall technical vision for your SaaS product. They bridge the chasm between business problems and technology solutions and match the solution with your corporate environment. For well-established companies, a solution architect can pinpoint areas where a SaaS solution can support business goals.

UI/UX designers

Over 42% of customers would pay more for a friendly, welcoming experience and your UI/UX team is who makes that happen. From a smooth onboarding process to the ease of use, SaaS product design should cover all touchpoints, mimicking the workflow of your users. 

Designers map that workflow, tap into the minds of your users, and create other foundations of the successful design process. Based on the user data, they then create a fully clickable prototype, test it with end-users, and send the final layouts into development.

Software engineers

Software developers are the ones who roll up their sleeves and put your business vision into practice. They set up the front end of your solution, its server-side and backend storage. Software engineers also weigh into creating and maintaining project documentation as well as weed out the bugs in the existing code. The number of software developers and their specialty is directly linked to your project requirements and scope.


Quality assurance engineers are vigilant gatekeepers of bug-free, user-centered, and business-led software experiences. They check and validate each aspect of your product, running it through multiple functional and non-functional kinds of tests. QAs, worth their salt, run and design automated tests as early as possible and then consistently throughout the entire development process.


Faster releases and delivery cycles cannot happen without the hands-on participation of a DevOps team. They design and implement continuous integration and continuous deployment strategies, automate builds and releases as well as take the silos out of your development team. The result of DevOps enablement is a nimble, adaptable, and friction-free development cycle guided by the real needs of users.

Delivery manager

A delivery manager is the ultimate middleman who works closely both with the product and the technology team. While a project manager keeps tabs on the progress of the project, a delivery manager oversees the project team. They keep everyone on the same page, ensure common priorities, participate in project planning, and update stakeholders on the status of product development.

5 reasons to outsource SaaS product development

Knowing the variables that go into a successful SaaS product is half the battle. But the real challenge begins with managing the uncertainty in resource availability. Tight deadlines, modest budgets, expensive hiring, and the lack of product development expertise haunt new product initiatives. Outsourcing your project takes this weight off your shoulders, while also providing unique benefits.

Faster time to market

The ability to bring a product or service to market quickly and efficiently can give a company a significant competitive advantage. And outsourcing is an excellent catalyst for product development. From faster hiring cycles to 24/7 availability of developer talent, outsourcing gives you a head start on product development and helps snatch leadership in the market by being first. Having a strategic outsourcing partner with a team at the ready also allows you to respond to market demand faster, avoiding fragmentation in releases.

Slashed development costs

In most geographies, the cost of hiring an in-house developer can reach twice the size of the base salary with employee costs added up. Not to mention the upfront investment in equipment and infrastructure required to develop a software product.

Outsourcing vendors are usually based in low-cost locations with accessible developer rates. Also, as the outsourced team is on a vendor’s payroll, you don’t have to cover benefits and other administrative costs, but pay exactly for the job done. Office space, infrastructure, software licensing, and other expenditure items are on the vendor as well.

Technological and methodological flexibility

Outsourced IT services give organizations the flexibility they need to deliver a trail-blazing solution based on the custom stack of technologies. Companies that outsource are not locked into limited in-house expertise and can land niche skills to solve problems and create new opportunities. Methodology-agnostic vendors can also help companies choose the tools and processes that suit the unique requirements of their projects.

Compliance with industry best practices

Partnering with external software engineering companies lets you unleash expertise in a particular business domain or area, such as healthcare or automotive. Experienced technology partners have a time-tested arsenal of practices and workflows that come as a bonus to technological proficiency. You don’t have to delve into regulatory compliance, standards in data sharing, data security requirements, and more — your vendor has got it covered.


The culture of customer-centricity doesn’t just appear out of nowhere, you need years to perfect and hone it. From calibrated market research to high-value features to user-driven design, customer-centricity stems from a batch of competencies that should live in your company. An outsourcing partner already has the skills and talent to focus on customer research and use the data gathered to build products/features your customers want.

Kick-start your SaaS development project

The SaaS model is only going to keep gaining prominence. As exciting as this opportunity is, you need much more than a business idea to gain your footing in the market. Lack of available talent, unfit solution architecture, subpar user experience, and other prerequisites could stand in the way of launching your SaaS business. Instinctools is a leading Saas product development company with an end-to-end approach and ample expertise that will get you on the track to a successful SaaS product.

Start your SaaS-powered journey to innovation


What is a SaaS product?

It is a business model that consists of software, hosted by the vendor, which is sold to customers. SaaS products don’t have to be downloaded and installed on devices. Instead, they offer instant access to users.

What is considered a SaaS product?

All SaaS products are hosted by a central provider and delivered to end users through the Internet. Multi-tenancy architecture, subscription-based billing, and elastic infrastructure are also commonly associated with these solutions.

What is SaaS development?

It is the process of designing and developing a complete software solution that can then be sold to customers at scale. Customers buy the right to use the software as a service instead of owning it outright.

What is SaaS-based product development?

It is an end-to-end process for launching a new SaaS product that requires not only technological expertise but also the knowledge of product development. Here, your team has their eyes on the value of the product, rather than focusing solely on deliverables.

What are the stages of SaaS development?

The development starts with meticulous market analysis and user research. Derived insights will allow you to ideate your product, select core features, and distill the unique value of your future product. From there, your development team elicits business and product requirements, plans the development process, and gets down to high-level design. They then develop a Minimum Marketable Product, release it into the wild, and collect feedback for further iterations. Post-release maintenance and support are also essential to guarantee a friction-free user experience and resilient growth.

Share the article

Anna Vasilevskaya
Anna Vasilevskaya Account Executive

Get in touch

Drop us a line about your project at contact@instinctools.com or via the contact form below, and we will contact you soon.