It is not certain that a Software Vendor, with a good solution that can be natively distributed on the Internet, can become a successful SaaS reality. Many companies are not focused on the On Demand model and support the SaaS business with other businesses: with the traditional sale of licenses, with consultancy, or with the Data Center business. To succeed in the SaaS business it is necessary to develop your own solution considering the target market to which it is addressed and the related cash flow forecasts. As the rate of increase in sales is very important for the SaaS business, this must be supported by a demanding sales and marketing plan. It is necessary to plan the use of capital and to follow a careful service strategy, channel, compensation and premiums. Alexander Osterwalder’s Business Model Canvas can be used in the rigorous construction of its own successful SaaS model. 

Osterwalder’s Business Model Canvas – strategyzer.com

The unified model proposed by Osterwalder allows defining all the key points of a successful business model. For each building block of this model it is possible to identify specific characteristics of the SaaS business:

• Value Proposition: It is the set of products and services that a company offers and that represent value for a specific market segment. It represents the way in which a company differs from its competition and the reason why a customer buys from a certain company and not from another.
• Core capabilities (Activities & Resources): They represent the skills and abilities necessary to implement the corporate business model.
• Network of Key Partners: It consists of business alliances that complement the other aspects of the business model.
• Target Customer Segments: These are the customers of a given market segment that are the object of the offer of certain products / services.
• Distribution Channels: It is the way in which a company supplies products and services to customers. Marketing and corporate distribution strategy is included.
• Customer Relationships: It is the relationship that a company establishes with the different segments of its customers.
• Cost Structure: It is the monetary value of the means used to realize the business model.
• Revenue Streams: It is the way in which a company realizes its income through different monetary flows.

Using the Business Model Canvas it is possible to define the business model for a generic SaaS Vendor.

The value proposition is represented by the SaaS itself with its related features (such as the possibility of integrating via API) but also by the pricing model and everything that can represent a value for a customer (ex: support). The key activities of a SaaS Vendor are those typical of software development but using the new DevOps methodology. Key resources are certainly represented by people and the source code but also by the cloud platform adopted, fundamental not only in terms of potential but also in terms of skills. With regard to revenue streams, it is important to remember that the SaaS business model is based on subscriptions even if it is possible to decline them according to different metrics (users, reports, GBs, …).

After defining the generic business model for a SaaS Vendor, the next step is to identify the fundamental components to implement it.

The model that I propose and that I called “SaaS Components Canvas” follows the outline of the Business Model Canvas but uses the following macro-components as compiled areas:
– Front-end: represents all the possible interfaces to users (both human and other systems) of the SaaS. Certainly a SaaS will present a web interface but mobile App, APIs or future interfaces may also be present (Ex: VR, AR). In this macro-component the various frameworks or libraries underlying the interfaces must also be considered.
– Back-end: represents the functional part of SaaS, which can be implemented with the most varied technologies and architectures (3-tier architecture, microservices, serverless, …).
– Core Processes & Tools: contains all the tools, systems and resources that allow the correct execution of core processes, or the entire production cycle and software management.
– Integrations: includes all the methods of integration with services, data or external devices.
– CRM: represents all the systems supporting the relationship with the customer.
– Billing & Accounting: contains the various systems necessary to ensure the revenues associated with the SaaS subscriptions.
– Monitoring Tools: includes all monitoring systems related to SaaS and business (including customers, suppliers and employees).

This model has the advantage of identifying what will be the fundamental components of the SaaS that you want to implement but without going into the details of specific solutions or technologies.

Starting from the SaaS Components Canvas, by making specific choices (technological, organizational, economic, …) for your SaaS, you can identify one or more software products or enabling technologies with which to implement each component.
The following model is only a possible example of implementation of the SaaS Components Canvas. Moreover, the focus of this article is not on the specific technologies that can be adopted but rather on the process of defining the individual components.

As selection criteria for the various components, I preferred, where possible, to find open source solutions, widely used technologies and, in the case of commercial solutions, SaaS with free plans or otherwise accessible even to small startups.

Finally, in the following model, the services available on the AWS cloud platform were chosen as components. The components in italic are third-party solutions available on the AWS marketplace, while those in uppercase and bold represent a set of services rather than a single service.