Essential Guide to SaaS Development in 2025 for Business Growth

Do you remember the times when we had to go to the store and buy a licensed CD if we wanted to install any software on our PC? Perhaps, some of you cannot even imagine that it was a thing back then! Most of the apps we use daily are now the result of the SaaS development process.

SaaS stands for ‘Software as a Service’ and describes a model for accessing web apps over the Internet. In this model, the software acts as a service provided by the owner who created it and handles the maintenance independently. When you hear the term ‘SaaS’, know that it refers to the cloud-based delivery model, providing access to data from any device connected to the Internet using a web browser.

SaaS is very easy, profitable, and scalable depending on your needs. These factors are the main reason why the global SaaS market is growing rapidly and showing no signs of slowing down. In 2023, According to Fortune Business Insights, the global software-as-a-service market was valued at 273.55 billion US dollars. It is expected to grow to 1,228.87 billion US dollars by 2032. Promising, isn’t it?

What is a SaaS product?

Saas is a centralized program provided to users via the Internet on a subscription basis. Users access it through their web browser, eliminating the need for local installation. The software itself is usually located on the developer's server, which ensures the functionality of the program, its regular updates and improvements. 

A vivid example of this model in the B2C segment is the Google Docs service. We get the functionality of a text editor at our disposal using a browser. For this, you do not need to install the program specifically on a work computer. Its functionality is moved to the cloud, so users can work on a document online from anywhere in the world.

What corporate SaaS products are there?

Depending on the industry for which SaaS applications are created, they can be classified into the following types: 

Customer Relationship Management (CRM) helps build relationships with customers and improve marketing strategies. For example, Hubspot, Salesforce, and Zoho.

Content Management Systems (CMS) offer website content management capacities. WordPress.com is a prime example flanked by Wix, Squarespace, and the like. 

Enterprise Resource Planning (ERP) software helps large businesses manage different types of processes, including manufacturing, trading, reporting, sales, supply chain management, human resources, and more. Examples of such products are Oracle NetSuite, Microsoft Dynamics 365, SAP Business One, Odoo, and many others. 

Project Management Software: Trello and Jira are the most popular examples of solutions that help companies manage workflow and collaborate with team members in a shared workspace, dealing with task allocation, resource allocation, and project tracking. 

Human Resources (HR): These platforms are aimed to simplify human management processes starting from candidate sourcing to employee termination. Cloud solutions for HR departments provide a convenient interface for HR management that includes the possibility of managing the personnel database, hiring, training, development processes, productivity assessment, and compensation and benefits management. The market of cloud-based HR solutions includes Zoho People, Oyster HR, Deel, OrangeHRM, Paycor, and others. 

Email Marketing oversees email campaigns and automates newsletters. Examples include Mailchimp, Constant Contact, and ActiveCampaign.

Social Media Management: there are quite a few products for delayed scheduling and they also have inbuilt tools for analyzing performance. Hootsuite, Buffer, and Sprout Social are some of them.

E-commerce Platforms: Online stores require tailored tools to manage their products, inventory, shipping, and taxes. The most popular e-commerce software are BigCommerce and Shopify.

Graphic Design: These tools assist in creating and editing images, graphics, and other visual materials (Figma, Canva, Adobe Creative Cloud).

SaaS Marketing Tools: Used to help organizations implement their marketing strategies and campaigns and track their business success. These include analytics tools like Google Analytics, social media management platforms – HootSuite, SEO tools – SEMrush, Ahrefs, etc. 

SaaS Tools for Remote Collaboration: this type of SaaS encompasses different types of solutions such as cloud storage and file sharing apps (Google Drive), time tracking tools (Harvest), online chats (Slack), and video conversing tools (Google Meet, Zoom).

How is SaaS different from web application development?

All SaaS are web-based but not all web apps are SaaS. The way they are accessed, deployed, managed, and scaled makes them different from each other. 

How to create a SaaS product

Any SaaS product development process goes through three main stages of creation: 

I. Product discovery (transforming the idea into application requirements – clear instructions for the development team).

II. SaaS MVP development (creating the first viable version of an application to start testing).

III. Iteration and scaling (investing in further development of the SaaS platform). 

Each of these stages includes several more processes. Therefore, 7 steps of Software as a Service development are recognized. 

Step 1. Confirm your idea viability 

This step is crucial to the creation of a cloud-based product that will reflect actual needs and have a potential market. Carrying out this step will prevent you from time and money input into a product that no one will buy. 

Tasks: 

• Research the market, and assess the demand for similar products created by your competitors; 
• Define your target audience, and outline its fears, needs, and preferences;
• Evaluate the existing products on the market, and determine their strong and weak spots, this will help you to shape your unique value proposition and develop a strategy; 
• Establish the concept of your unique product. 

Step 2. Describe your product’s functionality in the utmost detail

As clearly as possible define the features, functional capacity, and user experience that your SaaS will provide. Design a comprehensive roadmap that will outline the development stages, determine key functions that will have the highest priority, research financial models of your SaaS, and state the realistic timeframes.

Despite the fact that the main features depend on the SaaS, don’t forget the recommended ones that include user authentication, data security (password policy, data masking, access control, etc.) user-friendly interface, customer support, and so on.

Step 3. Choose the right monetization model

When creating a SaaS, you should keep the balance between offering value to customers and ensuring you get a fair reward for your product while remaining competitive. 

There are ample monetization models out there. Here are some of them:

• Pricing per individual (per-user pricing) implies charging customers depending on how many employees use the solution; 
• Tiered pricing offers a few packages with different sets of features that go at different prices; 
• Storage pricing where customers pay based on the amount of storage they need; 
• Feature-based pricing, when the price depends on the features available (enabled) to customers; 
• Pay-per-use means the price will differ depending on the frequency of SaaS usage; 
• Subscription — when a specific product is offered for a set price usually upfront with recurring payments; 
• Freemium means that customers get some features for free but can claim more advanced ones in paid packages.

Also, do not forget the two vital metrics that define your business success — customer acquisition cost (CAC) and customer lifetime value (CLV). You can read more about this in our blog: Understanding Unit Economics: A Critical Metric for Startup Success. 

Step 4. Pick your technology stack 

By technology stack, we understand the technologies that will be used for your software development. They include the interface (frameworks and libraries), backend (frameworks and libraries), databases, servers, and infrastructure configuration. 

Factors to be taken into account are scalability, maintainability, and level of developers’ professionalism. We at the SmithySoft team, a SaaS development company for scalable, high-performance solutions, can easily help you with this. See what exactly we offer in this field: https://www.smithysoft.com/saas_development. 

Step 5. Design your minimum viable product (MVP) roadmap 

Now that you know what you want your software could do, you need to create a minimum viable product (MVP) roadmap. This roadmap should include steps that have to be made to test and deploy an effective SaaS product with minimal risks and resources. 

Read more about the importance and nuances of developing an MVP here: Why You Need a Minimum Viable Product? 

As for specific, step-by-step help with creating an MVP — here:  https://www.smithysoft.com/startups-mvp-development 

Step 6. Check, test, and improve 

After the deployment of the MVP, the real journey starts during which you will conduct multi-faceted testing, gather feedback, fix the bugs, make enhancements, etc. Take care of the security to protect user data with strong user authentication, encryption methods, and industry standards at this point. Make sure your app is compliant with relevant regulations (e.g. GDPR, HIPAA).

Perform comprehensive testing of your SaaS product covering functionality, performance, cloud security assessment, and user acceptance testing (UAT) to identify and resolve any issues. 

Step 7. Deploy, Launch, and Sell 

Choose a reliable cloud service provider to host your SaaS product. Deploy your software and monitor its performance closely. Prepare for the official launch with a marketing strategy that includes SEO, content marketing, social media, and email campaigns to engage users. 

After that, gather user feedback, analyze it, and continuously update your application with new features and improvements based on the feedback data and market trends. 

SaaS Product Development Challenges

SaaS Platform Development indicates a company’s willingness to keep up with technological advancements. However, some risks associated with the cloud can slow down the development/migration process for some companies. Here are some of them:

1. Security

SaaS applications contain a huge amount of sensitive information that can be accessed from almost any device with the browser. This increases the risk of hacking. To prevent this, SaaS database service providers use SSL and TLS as their standard security protocols to encrypt user-to-server and user-to-user communications.

However, this danger is not comprehensive enough to secure the level of data handled by SaaS solutions. 

With the new GDPR rules coming into effect and standard tenant protection measures, it’s crucial to make sure your database design is secure. On top of that, when we’re working on projects for American clients, there are specific systems (like for medical industries) that we need to take extra steps and follow the HIPAA constraints to the system that ensure that patients' data does not leak outside of the system boundaries. The GDPR or HIPAA requirements should be defined and implemented from the initial phase of the system.

2. Third-party integration

A typical SaaS has many features built into the platform; some are built by third parties and integrated into the software as a service via APIs, while others will inevitably be built from scratch. Therefore a cloud application must seamlessly interact with other apps to provide a great user experience. However, inadequate integration can lead to data fragmentation and impact performance. 

One of the vulnerable third-party features in most SaaS software is the payment system. This feature helps users make subscription payments or perform actions related to monetization and pricing. The problem here is that integration may be difficult because technical requirements are very complex. The best way to overcome this issue is to hire a qualified team of specialists. 

3. Updates

One of the common shortcomings of SaaS is the partial unavailability of the system during an upgrade or the release of a new version. You can avoid this by carefully planning “downtime” for the upcoming period and informing your clients about it. 

Another option is to carry out a blue-green deployment strategy to ensure system availability when upgrades are required. This is a deployment strategy in which you create two identical environments apart from each other. One environment (blue) runs the current version of the application, and the other (green) runs the new version. Using a blue-green deployment strategy increases application availability and reduces deployment risk by simplifying the rollback process if the deployment fails. After the testing in the green environment is complete, the current application traffic is directed to the green environment, and the blue environment is stopped. 

Trends that shape SaaS development in 2025

The SaaS market continues to grow and penetrate various industries and business areas. The demand for the service will only continue to persist due to flexibility, scalability, and reduced implementation cost.

The most obvious trend in 2025 is The AI-fication of SaaS. 

Influential people in tech like Maciej Wilczyński, Co-founder of Valueships, Machiel Kunst, Founder and CEO of Bluebird, Sofia Faustino, Senior Manager of Insights at ChartMogul, and Scott Leese, Fractional CRO and GTM Advisor had something to say on that aspect.

According to Maciej Wilczyński, AIs will cost 90% cheaper than they currently are (if the current trajectory holds). This will take time, of course, so until then, companies will have a chance to experiment with usage-based pricing and continue the debate on whether usage-based or licensing is the better pricing model in the long run. 

Machiel Kunst says that 2025 will be a big year for SaaS, driven by renewed VC funding, increased and smarter hiring, and innovative AI tools. Companies inevitably will scale faster with flexible solutions replacing rigid legacy systems.

According to Sofia Faustino, AI and no-code tools make it easier than ever to launch SaaS products. She's confident that there will be plenty of new players entering the game. However, she’s also reminding us that building a SaaS that delivers real value is still tough. In 2025, experimentation will flourish but customers will demand clear ROI. Only SaaS businesses that can effectively demonstrate their impact will survive and thrive into 2026.

Scott Leese’s opinion is that there will be a return to liquidity, cloud migration, vertical-focused apps, low-code platforms, consolidation, enhanced security, and AI-powered automation. The strategy of the companies will decide whether it will drive the industry forward or ruin it.

SaaS services integrate with other models and cloud tools, allowing for the creation of comprehensive solutions. Increasingly, SaaS platforms are using artificial intelligence and Big Data. 

According to Fortune Business Insights, the healthcare segment will be the market leader for SaaS in the near future. Healthcare providers are moving their applications and storage to the cloud to enable hybrid and remote work. Cloud services help healthcare providers obtain real-time health statistics and minimize IT system complexity with simplified storage solutions. The rapid development of telemedicine technologies, such as video/audio conferencing, telesurgery, and teleradiology, will contribute to the implementation of cloud services. 

Micro SaaS is another trend to hold the stage. Giants such as Salesforce, HubSpot, and Zendesk often do not meet the specific needs of a smaller, niche audience. This is where micro SaaS enters the arena, offering specific practical and effective solutions. So instead of trying to build the next universal ERP or CRM system, think about this: focusing on a niche can be your ticket to success.

CONCLUSIONS 

SaaS solutions provide many business benefits, such as lower production costs, faster development, and greater flexibility. The benefits of SaaS applications from the user perspective are numerous. But they can also bring no less benefits to startup founders: business development prospects, regular income, scalability, global reach, automatic updates, a large base of potential customers, the freedom to explore your users, adapting your application to their needs, and therefore the opportunity to provide them with greater value. 

If you are looking for an experienced team of SaaS software developers to turn your ideas into a successful product, SmithySort is the right place to go. We know exactly what and how to do it so that you are satisfied with the result. Contact us!