Insight: SaaS (16) PaaS
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We covered why SaaS products require user experience in the last article ‘Insight: SaaS (15) Why does SaaS need user experience?’. Today, we’ll talk about PaaS, its role, and whether or not SaaS should develop its own PaaS.
Definition of PaaS:
Many individuals have provided definitions of PaaS on the Internet, so you can search yourself. Simply put, the ultimate PaaS provides comprehensive development and operating environment that allows you to develop an application on it without a lot of facility deployment and environment setup. The terms PaaS, SaaS, and IaaS are frequently used interchangeably. IaaS is similar to a simple network facility rental, in that it allows clients to write and deploy any code they create. A software-as-a-service (SaaS) offering solves a customer’s specific problem and allows them to use it directly. PaaS is a form between IaaS and SaaS. It eliminates a lot of coding labor as compared to IaaS. In comparison to SaaS, it offers a degree of customization, allowing it to fulfill the individual needs of consumers in specific instances. It is, however, more of a compromise solution.
PaaS accounts for only 15% of the whole Cloud market, whereas SaaS accounts for 65%. PaaS has fatal flaws if it becomes a company’s primary product and market positioning:
PaaS is in the middle of the industry chain. It is not as good as SaaS for solving client problems and solving them clearly. The main advantage of PaaS sector entrepreneurs is that they can address different problems for different consumers because of its customizability, and the largest disadvantage is that they don’t have enough focus which is decided by the characteristics of PaaS products. PaaS, on the other hand, is not as good as IaaS in dealing with the underlying, complicated challenges, and it has significant flaws in terms of flexibility and cost. IaaS is preferred by experienced developers. PaaS is in a precarious situation.
The majority of PaaS products on the market are created by SaaS companies. Why do most SaaS businesses need to develop their own PaaS? What issues does PaaS address in SaaS businesses?
In most cases, SaaS companies must create their own PaaS to meet the unique needs of Enterprise customers. Within a specific range, PaaS can solve client customization issues.
1. Without PaaS, large-scale customized development cannot be mass-produced; otherwise, it will die outright. The difficulty for SaaS companies is custom development for Enterprises. Enterprises will leave if you refuse to build SaaS for them alone. However, development necessitates a significant amount of effort, which has an impact on the whole growth strategy and can easily lead to management misunderstanding. Demand for customized development will result in one-time income, influencing the CEO’s decision. Everyone likes revenue, but these aren’t recurring revenues and shouldn’t be the primary source of money in a SaaS model. The CEO of a SaaS company must ensure that subscription revenue accounts for a significant portion of total revenue.
2. Enterprise clients are the tier who make the most money, get the most willing to pay, and have the highest renewal rate. PaaS can also save a lot of money on maintenance costs for enterprises that use customized SaaS. The needs of big companies are constantly changing at a rapid pace. If you want to keep customers at a cheap cost, allowing customers’ engineers to create and customize the software with PaaS can not only suit their needs but also reduce the SaaS company’s staff and avoid the discomfort of customization.
3. Using PaaS can broaden your consumer base. Through PaaS, more ISVs have built proper SaaS applications for various customer groups. This is a fantastic scenario; but, the prerequisites for PaaS are really high, and SaaS businesses will not be able to achieve this effect before they become giants.
We found that existing PaaS can handle a variety of difficulties, so we can define it on some levels.
1. Level-1 PaaS can customize any type, function, and authority. It requires its own DSL(Domain-specific Language) as well as comprehensive development documentation. ISVs can create apps on their own. However, it cannot break away from the scope of SaaS, and instead of writing programs line by line, there must be well-designed UI interactions that are as simple to use as feasible.
Users can be SaaS company employees, clients, or any third-party individuals who have passed registration.
2. Level-2 can add fields and key values, as well as construct autonomous business logic in a specific scenario. To help users complete part of the logic coding, low-code and no-code tools are required. However, it is unable to meet the unlimited needs of customers.
Users can be SaaS company employees, clients. Customers can design their own processes and their own data formats to make SaaS more suitable for the company’s usage habits.
3. Level-3 open API and closed development environment. Customers can design, access, and integrate open APIs into other systems, but the SaaS firm is just responsible for maintaining the API and will not have any additional functions. There is a PaaS prototype within the SaaS company that can speed up the process of customized development, but there are still many issues that prevent customers from using it themselves.
The users of the API are customers and employees of SaaS companies. Employees of SaaS organizations are the private prototype PaaS users.
Most of the SaaS companies with PaaS are at Level-3, with a few large SaaS companies having level-2 PaaS. Salesforce, Microsoft, and Oracle are among the level-1 PaaS providers. The technological level required to produce Level-3 is low, and SaaS organizations should strive for Level-3 PaaS at the very least. Level-2 PaaS necessitates a substantial investment as well as reliable architecture and new product design capabilities. And there’s a big difference between nearly getting to Level 2 and excelling at it. With the exception of a few exceptional cases, Level-1 PaaS products are frequently produced from the technical reserves of the IaaS behemoths. The complexity is really high, and it cannot be solved by money.
So should SaaS companies develop their own PaaS?
My response is unequivocal: They must do it. They don’t have the strength to accomplish it right now, but they must be ready to do it in the future. They must gather strength to prepare for a Level-2 PaaS before they can develop a Level-3 PaaS. Enterprise customers’ value can only be maximized by SaaS firms that have implemented PaaS. Enterprise clients are the key to ensuring NDR for SaaS companies. When serving big companies, SaaS without PaaS constantly stacks up manpower. At best, it’s easy to get dragged down, and large consumers end up becoming a burden. Enterprises’ needs can be largely addressed with PaaS, and the high-quality revenue for Enterprises can be shown.
PaaS construction requires a lot of labor costs. If you want to build one, think twice.
The next article ‘Insight: SaaS (17) Low Code or No Code is not the future’ is published. Simply send me some claps and feedback if you enjoyed my article.
