Back in 2008, the global SaaS market was worth just over $5 billion. However, by 2020, the market had grown by over 28x to $157 billion.

Naturally end user spending has also increased, in less than 10 years, global spending has increased by over 5x to approximately $176.62 billion making SaaS startups viable, lucrative, and scalable.

So, you’ve developed a dynamic and exciting SaaS product that solves a problem for your ideal customer. You’ve researched the market, your competitors and developed a product launch strategy that is set to take your target market by storm.

You’ve even nailed the branding and your vision is coming together seamlessly. Next in your SaaS start up development, you will face a critical decision, selecting the appropriate cloud architecture for your SaaS product.

Your choice can profoundly impact your business's scalability, performance, security, and cost-effectiveness. Among the myriad of options available, two primary models stand out: private cloud and public cloud environments.

In this article, we'll delve into the nuances of each, empowering you to make an informed decision tailored to your SaaS startup's unique needs.

Evaluating Technical Capabilities

When selecting a cloud provider for your SaaS startup, it's crucial to evaluate various technical capabilities to ensure that the chosen provider can adequately support your business needs both at the initial stages and as your user base grows.

Start by listing what you will need from your hosting provider when it comes to technical requirements.

Here are 10 questions you should ask each potential cloud partner:

1. How easy is it to scale?

   The ability to scale resources up or down based on demand is critical for SaaS startups experiencing rapid growth.

   Look for a cloud provider that offers elastic scaling capabilities, allowing you to seamlessly accommodate increases in user traffic and data volume without compromising performance.

2. What SLA guarantees can the cloud partner provide to you?

   Downtime can be detrimental to a SaaS startup's reputation and bottom line.

   Choose a cloud provider with a robust infrastructure that guarantees high availability and reliability. This includes redundant systems, data replication across multiple locations, and SLAs that ensure minimal downtime.

3. Does the provider have the appropriate accreditations, such as ISO 27001?

   Security is paramount when handling sensitive customer data and intellectual property. Evaluate the cloud provider's security measures, including encryption standards, access controls, threat detection, and compliance certifications (e.g., SOC 2, ISO 27001). Additionally, consider the provider's track record in handling security incidents and their transparency in reporting and addressing vulnerabilities.

   The provider should adhere to the NCSC’s 14 cloud security principles.

4. How will your chosen cloud provider ensure optimal performance?

   Optimal performance is essential for delivering a seamless user experience. Assess the cloud provider's network infrastructure, including latency, bandwidth, and data transfer speeds. Look for features such as content delivery networks (CDNs), edge computing, and caching mechanisms that can enhance performance and reduce latency for users across different geographical regions.

5. What types of data will your store and how can the provider accommodate your requirements?

   Efficient data management and storage capabilities are critical for storing and processing large volumes of data in a SaaS environment. Evaluate the cloud provider's offerings in terms of storage types (e.g., object storage, block storage, file storage), data redundancy, backup and recovery options, and data lifecycle management features.

6. How will your cloud partner manage databases?

   Many SaaS applications rely on databases for storing and managing structured data. Choose a cloud provider that offers robust database services with support for various database engines (e.g., relational databases like MySQL, PostgreSQL, NoSQL databases like MongoDB, Cassandra), scalability options, backup and replication features, and integration with other services.

7. Will your chosen cloud partner offer dev tools?

   SaaS startups often require flexible development tools and APIs to build, deploy, and manage their applications efficiently. Look for a cloud provider that offers a comprehensive set of developer tools, SDKs (Software Development Kits), and APIs for automation, integration, and monitoring. Additionally, consider the provider's support for popular programming languages, frameworks, and DevOps practices.

8. How will your cloud provider monitor your environment effectively?

   Effective monitoring and management tools are essential for optimising performance, detecting issues proactively, and maintaining compliance with SLAs. Evaluate the cloud provider's monitoring dashboards, logging capabilities, alerting mechanisms, and management APIs for managing resources, configuring policies, and automating routine tasks.

9. How will your cloud provider optimise your platform for cost?

   Cost transparency and optimisation tools are crucial for controlling expenses and maximising ROI (Return on Investment).

   Look for a cloud provider that offers detailed billing reports, cost analysis tools, budgeting features, and cost-saving recommendations.

   Additionally, consider factors such as pricing models (e.g., pay-as-you-go, reserved instances, spot instances) and discounts for long-term commitments.

10. If things go wrong, how will your cloud provider support you?

    Finally, assess the cloud provider's support offerings and SLAs to ensure timely assistance and resolution of issues.

    Look for 24/7 technical support, dedicated account managers, and documentation resources. Pay attention to SLAs for uptime, performance, and response times, as they provide assurance of the provider's commitment to service quality.

Cloud Architecture Models explained: Private vs Public Cloud

Private Cloud:

Private cloud architecture offers unparalleled control, customisation, and security, making it an attractive option for startups dealing with sensitive data or compliance requirements. Here are some compelling use cases for choosing a private cloud environment:

1.     Enhanced Security:

For SaaS startups handling sensitive customer information or operating in regulated industries such as healthcare or finance, data security is paramount. With a private cloud, you have full control over your infrastructure's security protocols, allowing you to implement stringent measures tailored to your specific needs. This includes advanced encryption, network segmentation, and robust access controls, providing peace of mind to both you and your customers.

2.     Compliance Requirements:

Regulatory compliance can be a complex maze for SaaS startups to navigate. Whether it's GDPR, HIPAA, or SOC 2 compliance, adhering to regulatory standards is non-negotiable. Private cloud environments offer the flexibility to customise your infrastructure to meet these requirements without compromising performance or scalability.

3.     Predictable Performance:

In a private cloud, you're not sharing resources with other tenants, ensuring consistent performance even during peak usage periods. This predictability is crucial for SaaS startups striving to deliver a seamless user experience and maintain customer satisfaction.

4.     Customisation and Flexibility:

Every SaaS startup has its unique requirements and workflows. With a private cloud environment, you have the freedom to tailor your infrastructure to align perfectly with your business objectives.

Whether it's optimising for high availability, disaster recovery, or specific application requirements, partnering with a private cloud provider can offer unrivalled flexibility.

Public Cloud Environment (e.g. Microsoft Azure): Scalability and Cost-Efficiency

Now, let's shift our focus to the public cloud—an expansive ecosystem of shared resources and services offered by providers like Microsoft Azure. Public cloud environments have gained immense popularity among SaaS startups for their scalability, agility, and cost-efficiency.

Here's why:

1.     Scalability on Demand:

SaaS startups often experience rapid growth and unpredictable spikes in demand. Public cloud platforms like Microsoft Azure provide elastic scalability, allowing you to effortlessly scale your infrastructure up or down in response to changing usage patterns. Whether you're serving a handful of users or experiencing exponential growth, the public cloud ensures your infrastructure can keep pace with your evolving needs.

2.     Cost-Efficiency:

Cost considerations are paramount for startups operating on tight budgets. Public cloud providers operate on a pay-as-you-go model, enabling you to align your infrastructure costs directly with your revenue streams. This eliminates the need for significant upfront investments in hardware and infrastructure, making it an attractive option for cash-strapped startups looking to optimise their cost structure.

3.     Global Reach and Accessibility:

As a SaaS startup, your customer base may span across geographies and time zones. Public cloud providers offer a global network of data centres, ensuring low-latency access to your services from anywhere in the world. This global reach not only enhances the user experience but also enables you to easily expand into new markets without the hassle of setting up physical infrastructure.

 4.     Managed Services and Innovation:

Public cloud platforms like Microsoft Azure provide a vast array of managed services and tools, allowing startups to offload the heavy lifting of infrastructure management and focus on innovation. From AI and machine learning capabilities to advanced analytics and DevOps tools, leveraging these services empowers startups to accelerate their time-to-market and stay ahead of the competition.

Download Cloud Geeni’s eBook “Private or Public Cloud Hosting for your Software Business” to learn more.

Cloud Architecture choices & the effect on profitability

Opting for an architecture that doesn't align with your SaaS product's requirements can lead to inefficient resource utilisation and higher infrastructure costs.

For example, if you choose a private cloud environment when a public cloud would suffice, you might end up overprovisioning resources and paying for unused capacity.

Conversely, selecting a public cloud without considering scalability needs could result in unexpected costs as your user base grows.

The choice of cloud architecture can influence your SaaS product's pricing model and competitiveness in the market. If your infrastructure costs are higher than anticipated due to the wrong architecture, you may need to adjust your pricing model to maintain profitability. This could involve passing on the increased costs to customers through higher subscription fees or usage charges, potentially affecting customer acquisition and retention.

Overcommitting resources in the wrong cloud architecture can tie up capital and limit investment in other areas critical for growth, such as product development, marketing, and customer support. For example, if you invest heavily in building and maintaining a private cloud infrastructure that exceeds your current and future needs, you may struggle to reallocate resources to areas that drive revenue and innovation.

An excellent resource on the effects of cloud architecture on future profitability can be found here.

Developing your SaaS product with Cloud Geeni

Cloud Geeni can offer impartial advice on the optimal cloud architecture landscape for your SaaS start up, taking into consideration your goals, current SaaS development framework and technical requirements.

Schedule your complimentary cloud architecture consultancy below: