how to scale a SaaS business and SaaS scaling best practices

Key takeaways

  • SaaS scaling is the expansion of a Software as a Service (SaaS) business. It aims to meet growing demand while accommodating a larger customer base and fulfilling operational needs in the fluctuating landscape.
  • Scaling a SaaS business makes it more attractive to investors, potentially leading to additional funding and reduced time to market.
  • Scalability in software assesses the ability of software to maintain consistent performance despite the increase in workload and market changes.

In a constantly changing digital environment, companies plan for SaaS scaling to ensure their software and applications can sustain fluctuations. From compliance to security protocols, the ever-emerging operational standards require business agility.

Without a scaling strategy, cloud-based software and SaaS applications might block the way to consistent business growth. That’s why learning how to scale a SaaS business is one of the primary ways to grow your startup or small business.

With SaaS development solutions delivered, Acropolium has gained tons of insights that can make your applications future-proof. But before we share “how,” let’s explore “why” scaling a SaaS business is critical.

What is SaaS Scalability?

Software as a Service scaling implies expanding and growing a SaaS business. The purpose of scaling is to handle increased demand, customer base, and operational requirements.

It involves optimizing various aspects of the business, including tech architecture, resources, and processes, to accommodate growth and ensure continuous, effective service delivery. SaaS scale projects can take place in different dimensions, such as technology infrastructure, server capacity, system integrations, and global reach.

SaaS Market Size

SaaS scaling and SaaS market size 2023

The increasing popularity of SaaS stems from its capacity to deliver ongoing innovation. At the same time, it relieves users of the responsibilities associated with software management and maintenance.

The global SaaS market is expected to reach approximately USD 1,016.44 billion by 2032. This marks a significant increase from USD314.54 billion in 2023, growing at a CAGR of 13.92%.

Reasons to Scale up a SaaS Business

SaaS scalability benefits

Each company has its reasons to scale a software product, which centers around unique business needs and industry peculiarities. When the scaling strategy is conducted and followed correctly, businesses can unveil substantial SaaS benefits that streamline core processes.

Business flexibility

Companies can modify their offerings based on current or predicted market conditions. This means you can add new features or restructure the business model if the demand or market psychology shifts. SaaS scale-up also ensures you can easily change your IT infrastructure based on the growing or decreasing user base.

Reduced costs

Being able to quickly scale SaaS software means maintaining a high cost-performance ratio. Additionally, cloud computing services that offer cloud storage and computing resources help save money that would otherwise be spent on on-premise infrastructures.

According to the 2023 survey by MITTR, 84% of companies that use cloud platforms to reduce budgets report increased ROI. Nearly 66% of the surveyed companies link positive ROI with cloud investments.

Improved reliability

Cloud environments can improve the availability of your platform. You get to avoid expensive downtime (which may cost up to $540,000 a minute to an average enterprise) and maintain critical processes. And if something were to happen to your data after a ransomware attack or an earthquake, you could minimize damage with data backup tools.

Faster development time

SaaS scaling allows deploying products without overengineering. You can build SaaS solutions with essential features and limited resources, which shortens the development cycle. Then, as the demand grows, you can add other services and allocate more computing power.

This way, you don’t spend too much effort on development or overstuff your SaaS with unnecessary functionality.

More potential for growth

Flexibility gives your businesses more expansion opportunities. Here’s an example: you can add features or experiment with such SaaS business models as subscription tiers to attract new customers and retain existing users. Besides, you can invest in new servers to make your SaaS perform better for people in different geographic areas. And, as we mentioned, being able to adjust computing resources keeps your performance high despite the increased load.

With all that said, attaining scalability requires strategy. Now, let’s talk about choosing the right SaaS technology and scaling techniques.

Data-driven decision-making

Scaling SaaS involves collecting data, implementing analytics tools, and real-time monitoring. Defining KPIs, integrating machine learning, and analyzing user feedback drive personalized experiences and A/B testing.

Strong data governance, scalable infrastructure, and team training are crucial for quality insights and continuous SaaS scaling and development improvement.

How to Scale a SaaS Business: 10 Strategies

Scaling up a SaaS company for growth and how to how to scale SaaS business software

True scalability means aligning your business strategy and IT infrastructure with the evolving demand. Here are businesses’ most common strategies for scaling single and multitenant SaaS products.

Adopt a modular approach and microservices

Companies that follow the principles of modularity can divide their business into smaller independent units. You can appoint teams for units and give them autonomy to choose strategies that fit their specific functions best.

Microservice architecture works similarly to modularity. With it, you split your system into loosely coupled but highly cohesive modules. These modules have specific functions and don’t depend on other components of your system. As a result, you can easily add new features or update existing ones without causing the entire system to crash, thus scaling SaaS software.

Outsource your business functions

According to Statista, the IT outsourcing market is expected to hit a revenue of US$512.50 billion by 2024. Outsourcing SaaS development can be done strategically to scale up your product. Hiring an experienced software development company is the fastest way to enhance your in-house team with relevant skills. Moreover, it eliminates expenses on training, retaining, and renting office space for your employees. At the same time, when outsourcing custom software development, you can get a one-of-a-kind product that serves your specific needs.

Promote through multiple channels

Effective marketing is more than buying ad space, social media promotion, and search engine optimization. You might want to promote your brand through influencers. That’s what Spotify did when it aimed its streaming platform at Swedish music bloggers who spread the word about the app.

Using your loyal customers as a sales channel through referrals is also a good idea. Try incentivizing them to recommend your product to their friends with discounts, cashback, or free subscription months.

Offer free subscription models

Free trials and freemium tiers can convert curious users into paying customers. The Freemium model gives users a glimpse into the key features of your product. Free trials make users rely on the tool, so they would want to keep using it to solve their problems for a small monthly fee.

You can also try offering a free tier with an option to try the premium version and then monitor how it improves your conversion rates. Free offerings allow you to gather feedback from a broader range of users. Those who didn’t convert are likely to share what’s missing from your offerings, which could help you scale up SaaS products in the right direction.

Integrate third-party APIs

Instead of building the entirety of your software, you can connect third-party services to your platform via application programming interfaces (APIs).

Let’s say you’ve built an MVP or prototype for a telehealth app. The first testers point out that you need a tool to check a patient’s eligibility for reimbursement. With a suitable API, you can add this feature while saving costs.

Communicate with your audience to retain them

Quality omnichannel support is the best way to retain your users. This means investing in a customer portal with FAQs, knowledge bases, and self-service features.

AI-powered bots can be a nice touch. They can help your staff handle low-priority requests and common questions, which could be the bulk of all customer requests. After the integration of chatbots, 90% of businesses observe substantial enhancements in the speed of resolving complaints. Keeping the client base engaged with regular software updates is also crucial.

Leverage cloud-based infrastructures

Cloud computing platforms like Google Cloud, Microsoft Azure, and Amazon Web Services allow you to rent their cloud environments, complete hardware, operating systems, and applications.

With cloud platforms, Scaling SaaS infrastructure is infinitely faster and cheaper than on-premise servers. Additionally, the cloud vendors manage the IT infrastructure for you.

Keep your SLAs up-to-date

As your business expands, you will need more servers, faster response times, and more reliable uptime for your SaaS. It’s then critical that the Service Level Agreement (SLA) with your cloud infrastructure provider reflects your future needs. To scale SaaS successfully, we recommend reviewing your agreement regularly to know when to negotiate new terms.

Prioritize analytical data

According to the State of Agile survey, 37% of businesses saw a strong positive impact on management and goal alignment from Agile practices. In addition, following these techniques helped over 65% of responders improve their operational activities.

A data governance program and AI-powered analytical tools can improve your capabilities. This could help you extract data across your business units, analyze discrepancies and invoice errors, and predict socio-demographic trends.

Follow Agile development practices

According to the State of Agile report, 37% of businesses saw a strong positive impact on management and goal alignment from Agile practices. In addition, following these techniques helped over 65% of responders improve their operational activities.

Besides, in the 2023 Google DevOps survey, 57% of companies embracing Agility practices saw better alignment to business needs. They also experienced significant code deployment improvement from automated testing and continuous integration.

Guide to Scaling SaaS Products

scaling SaaS business product guide

While building a scalable app takes resources and investments, growing it takes time. It’s even harder to remain competitive in several markets at once. So, here are a few steps that could help you create a future-proof solution.

1. Assess your business

Analyze your company from different perspectives to ensure it can scale with the demand. Here’s a short checklist of items you should assess to scale up SaaS:

  • Technical specifications of your software and hardware (cloud platforms, data centers, servers, backend apps, open-source tools)
  • Sustainability and scalability of your architecture
  • Intellectual assets (copyrights, patents, software licenses)
  • Load testing tools and methodologies
  • Budget for servers, databases, and operations
  • Legacy system components that require replacement or migration
  • Internal policies and procedures
  • Organizational chart with employees, their roles, and responsibilities
  • Cybersecurity mechanisms and frameworks (authentication management, encryption, control mechanisms, intrusion detection modules)

2. Study your target markets

Before expanding your services, you need to gather as much information about your target markets as possible, including:

  • The desires and pains of potential users
  • The validity of their problems and willingness to pay for a solution
  • Currently available solutions and their differences from your product
  • Additional research is necessary when you’re expanding your scope on the local market, too.

3. Determine an optimal business strategy

According to a SaaS pricing report for 2023, 62.5% of businesses will follow sales-led or sales-assisted models, while 37.4% will adopt product-led or product-assisted strategies.

Subscription-based strategies are the most common among SaaS businesses. But if your pricing increases with time, you risk losing paying users. When scaling a SaaS business without overcharging clients, companies use a tiered pricing model with different subscription plans based on provided features.

You might also introduce usage-based pricing so that the rate will depend on how much data the user utilizes.

4. Select the right SaaS architecture

Appropriate architecture can ensure that your software has enough juice to handle increasing demand. You’ve got two options for SaaS infrastructure:

  • Single-tenant SaaS architecture offers dedicated servers, databases, and computing power. You get complete control over your software and advanced security, but it comes at the cost of more complex scaling.
  • Multi-tenant SaaS architecture shares software instances and the supporting infrastructure between multiple customers. It gives users less freedom to customize their cloud environment but makes allocating resources between databases and servers easier to handle heavier workloads.

Note that your cloud provider can have several options for tenant isolation. For instance, AWS offers accounts that run on dedicated hardware, multi-tenancy solutions, and various hybrid models.

5. Validate your concepts with an MVP

It’s wise to go for a minimum viable product (MVP) — a simplified version of your SaaS product. It helps to test the waters before launch, validating your product, market demand, and revenue model.

Concentrate on the critical aspects of your software for an MVP and scrap secondary features. In addition to saving costs and effort, it helps you see if your SaaS has a paying audience in the first place.

6. Be ready to alter your business plan

Growth tends to slow as your organization matures and can quickly flatten out if you’re not flexible enough. You must be ready to readjust and repurpose your SaaS to remain successful, even if SaaS scaling means shifting your target audience.

For instance, PayPay started out as a money exchange service. The project wasn’t as successful as hoped; they refocused on email payments. The company readjusted its course yet again after eBay became popular and became its primary payment process service.

This led to eBay buying PayPal for $1.5 billion, solidifying it as the most popular money exchange startup.

Common SaaS Scaling Issues and Challenges

scale-up SaaS challenges and potential business issues

Companies that put too much emphasis on scaling or don’t know how to do it might find themselves buried in issues. Let’s examine the common problems you should learn to avoid.

Premature scaling

Spending too many resources beyond the essential needs can fail your startup and gives you less room to experiment and pivot. You also can become too committed to your current strategy, which leaves you way less flexible. In fact, 70% of startups fail due to premature scaling of their offerings.

Sure, it’s right to build your SaaS with scaling in mind, but don’t scale from the get-go. For instance, microservices architecture can be too resource-heavy and unnecessary for smaller businesses. Startups might be better off with modular monolith architecture that divides systems into modules with defined boundaries. This way, you won’t consume as much computing power, and it’ll be easier to switch to microservices later on.

Spreading too thin

Focus is critical in the early stages of your company. Those who don’t understand it try to reach as many target audiences as possible. Another SaaS scaling issue arises when you invest in too many features, or target all marketing channels at once.

That’s dangerous territory. You won’t be able to effectively monitor your marketing efforts and their results with too many channels. Plus, you risk losing an understanding of the customers and services to prioritize.

Data security and compliance

According to the Flexera 2022 report, 85% of IT companies cite data security as the most critical challenge of cloud migration. In addition to that, compliance with laws is a crucial concern for healthcare and fintech niches. Failing to comply with regulations and cybersecurity practices in healthcare or fintech SaaS leads to data leaks, financial damage, and government fees.

You should prioritize robust security mechanisms when going from on-premise to scalable cloud-based infrastructures to minimize data security risks. This might include encrypting your databases, using multi-factor authentication, implementing role-based access control, and running penetration tests. Also, don’t forget about regular employee training.

Complex development

Developing a SaaS solution with the potential for continuous improvement requires a skilled team with a relevant technical stack. Plus, not all companies have an experienced IT team for cloud management. Thus, cloud computing is regarded as a pivotal facilitator of outsourcing initiatives by 90% of companies.

However, some approaches can reduce your engineering effort. For example, low-code platforms can improve the development speed with pre-built templates and reusable code. Garter predicts that 70% of apps will be developed by organizations using low-code or no-code platforms by 2025.

Creating scalable software still requires a great deal of expertise. So, it’s reasonable to hire a software development company with the skills you need for your project.

How Acropolium Can Scale Your Saas Software Product

Software-as-a-service Scaling case studies by Acropolium

Through 14+ years of crafting SaaS, Acropolium knows why cloud infrastructures may run slow and limit your growth. But, more importantly, we know how to resolve these issues and help your SaaS scale along with your business.

Our teams have helped dozens of companies restructure, migrate, or build cloud infrastructures. Here are just a few of the projects we worked on.

Cryptocurrency trading platform

Acropolium has built a scalable crypto trading platform. Our tasks included optimizing the SaaS architecture, setting up documentation, and developing an MVP on short notice.

We started by assessing the company’s infrastructure and finding opportunities for improvement. After building the technical requirements and documentation, we chose the Scrum methodology to cope with the tight deadlines and finished in under six months.

Our solutions allowed the company’s scalability to grow by 300%. The platform itself has been improving after release, all thanks to its scalable architecture.

Hotel management platform

The client asked us to optimize its hotel management app to work faster and withstand a growing amount of data.

Our audit showed that the client’s single-tenant architecture wasn’t built for scale. So, we focused on migrating the legacy functionality into a multi-tenant environment. The new architecture could integrate with old features and third-party services. Our efforts resulted in efficient cloud-based software that reduced the client’s costs by 40% and led to a 30% increase in revenue.

Final Thoughts

SaaS scalability is something you should bear in mind, no matter your initial plans. It helps you adjust to the market to maximize revenue or keep afloat in tougher times. At the same time, scalable architectures help you balance effectiveness with costs despite increased workload and demand.

Where do you even start scaling SaaS? The best thing to do is hire an experienced vendor to incorporate these strategies at flexible SaaS development pricing.

Acropolium’s extensive SaaS expertise can help you bypass popular issues and build a secure and scalable SaaS with fewer risks. If you want to entrust your project into capable hands, we’re always ready to talk business, offering budget-adaptive subscription-based cooperation.

Sources of Information