At a recent industry conference, I had a conversation with the owner of a thriving HR consulting firm. Like many leaders in her field, she was frustrated by the disparate array of tools available for HR and payroll management, which is spread across employee benefits management tools, performance tracking systems, payroll services, etc. This dissatisfaction catalyzed her long-term vision: the development of a proprietary software platform to consolidate all features offered by current Software as a Service (SaaS) tools into one cohesive system.

Her current business generates an annual revenue of approximately $5 million and she imagined this software platform as a potential subsidiary venture to her primary business. She considered eventually licensing the platform as a SaaS product to other businesses, thus establishing it as a potential new income source.

This vision, though ambitious and captivating, significantly underestimates the resources, effort, and capital required to realize such a complex digital platform—especially one intending to rival specialized SaaS products, each bolstered by tens of millions of dollars in developmental and marketing investment.

To achieve feature parity with these well-established, highly specialized tools could necessitate an investment of multiple millions of dollars for product launch alone. Attaining or surpassing the level of these existing products would demand an even more considerable financial commitment, especially when trying to achieve product differentiations that will establish market fit and dislodge incumbents. This sizable investment doesn’t even account for the continuous product maintenance, updates, and marketing necessary to remain competitive.

This venture could potentially overshadow her current business operations in terms of financial resources and attention, unintentionally jeopardizing the stability and future growth of her primary HR consulting firm.

This story, which we’ve seen repeatedly in conversations over the years, serves as a warning to entrepreneurs, digital product leaders, and their teams. It illustrates a widespread entrepreneurial misconception: the notion of building a digital application that outperforms the competition, often without fully understanding the extent of the dedication necessary to solve the problem better and develop, market, and maintain such a complex digital platform.

Creating a digital platform that can compete with established, specialized products involves more than just a persuasive idea or dissatisfaction with current offerings. It requires a substantial investment of time, resources, and ongoing commitment. Entrepreneurs need to balance potential benefits against potential risks, all while contemplating the impact such an undertaking could have on their current business operations. Approaching such projects with a balanced perspective and informed understanding of the true effort involved in building a competitive digital platform is critical.

Here are some practical strategies that help set up new product owners for success, including conducting comprehensive market research, strategically implementing the MVP approach, and understanding the complexities of launching a SaaS venture.

Consumer Insights, Market Sizing, and Competitive Analysis

The first crucial step involves conducting thorough market research on the existing solutions within your intended operational space. A fundamental step in comprehensive market research is obtaining profound consumer insights. This step requires a meticulous examination and understanding of the difficulties your target consumers encounter. Detailing each issue and then analyzing its impact on the consumer is crucial. This can be achieved by evaluating their pain points and needs, which may unveil opportunities for providing value. Moreover, identifying stakeholder groups interested in addressing the same issues is essential. By understanding their viewpoints, you could establish potential alliances, anticipate obstacles, and extract insights to guide your product development process. Additionally, to comprehend the market’s size and potential, it’s necessary to identify which segment of the total addressable market these problems impact and would most benefit from a unified solution. This analysis could aid in understanding your potential reach and refining your product or service offerings.

Another critical component of comprehensive market research is a competitive analysis. Given the crowded digital landscape, incumbent solutions to the issues you aim to address likely exist. Recognizing these solutions and understanding the psychological and functional value they aim to deliver to their customers is essential. One place to start is to acquire a robust understanding of your potential competitors’ funding structures. This knowledge can provide insights into their financial capabilities and potentially, their business strategies and growth plans.

Explore the inception and development of their product: How much time did they invest in their product’s development? What were the associated costs? Such information can impart an understanding of the temporal and financial commitment necessary to construct a similar platform.

Examine how their product has transformed over time. What features were included at launch, and what enhancements have been implemented since then? What obstacles did they encounter, and what lessons have they learned? These invaluable insights can assist in planning and strategizing for your product, potentially enabling you to circumvent similar obstacles.

Moreover, evaluate their marketing plans. How much capital are they allocating to product promotion? This information can provide a benchmark for your own marketing budget, helping you comprehend the resources required to promote your product effectively.

By conducting comprehensive market research, you can glean insights that allow you to predict more accurately the resources, time, and capital needed to launch your digital platform. It empowers you to devise your product development and marketing strategies based on market realities, rather than conjecture or ambitious forecasts. This approach, in turn, can aid in mitigating risks and establishing realistic expectations, thus fostering a more balanced perspective on the effort to bring your product to market.

Starting Small for Big Gains: Understanding the Benefits of an MVP Approach for Digital Platform Creation

An integral strategy when developing a digital platform is to adopt a pragmatic, incremental approach towards functionality. It’s often tempting to envision a product that incorporates every conceivable feature from the onset. However, such aspirations can result in an overwhelming scope of work, escalated costs, and protracted development timelines. They might also stretch your resources too thinly, compromising the product’s quality.

To circumvent this predicament, it’s essential to commence with a smaller scale and progressively augment functionality. This strategy is widely known as developing a Minimum Viable Product (MVP).

Embracing the MVP Philosophy

An MVP is a version of your product encompassing just enough features to satisfy initial users and garner feedback for future product development. Implementing the MVP strategy allows you to scrutinize your most critical assumptions and glean insights rapidly from your users’ experiences with minimal effort.

Committing to start small doesn’t entail forsaking your vision. Instead, it implies being realistic about what you can accomplish with the resources available and within your allocated timeframe. It facilitates prioritizing the most pertinent features that will deliver value to your users and distinguish your product in the market.

The process initiates by cataloging all potential features your product might possess, and then rigorously prioritizing them based on their value to both the user and the business, as well as their feasibility and cost. From this list, you select the smallest set of features to develop into a functional product.

The Benefits of an MVP Approach

The MVP approach confers several advantages. Firstly, it expedites your product’s market entry, allowing you to start collecting user feedback sooner, which can steer future development efforts.

Secondly, it reduces initial development costs, rendering the project more financially feasible. This can be especially beneficial if resources are scant or if you’re still in the process of securing funding. Ideally the MVP serves as a building block towards the future product, although incurring technical debt or creating a limited-use codebase can be a necessary stepping stone in certain circumstances. A product strategy consultant can help you make the right decisions to fit your needs.

Lastly, an MVP approach promotes flexibility. It empowers you to make adjustments based on user feedback and evolving market conditions without having excessively invested in features that may not resonate with users or may have become obsolete.

Building a digital platform is a complex undertaking. By starting small, focusing on an MVP, and incrementally introducing functionality over time, you can manage the associated risks and costs while learning from your users and incessantly refining your product. It’s a balanced, pragmatic approach that maintains your connection with your market and enhances the probability of developing a competitive product.

Commitment, Not a Side Project: Building and Maintaining Successful SaaS Products

Entrepreneurs frequently underestimate the exertion involved in creating and maintaining a successful Software as a Service (SaaS) product. It’s crucial to comprehend that building a SaaS product extends beyond a mere technical project—it’s a business enterprise in its own regard. It necessitates not just a committed team of developers, but also a distinct business model, a strategic marketing approach, a sturdy customer service operation, and consistent management attention.

The Business of SaaS Products

A successful SaaS product demands incessant updates and enhancements to remain competitive and satisfy evolving customer needs. Consequently, even after the initial launch, a considerable amount of effort and resources will need consistent allocation to the product.

Additionally, the SaaS model typically comprises a subscription-based revenue stream, implying the necessity to perpetually retain existing customers while attracting new ones to ensure a steady income flow. This condition requires an effective customer success strategy and team, aimed at maintaining customer satisfaction and minimizing churn.

Marketing a SaaS product constitutes another crucial component that requires strategic planning and resources. It’s paramount to promote your product, attract potential users, and convert them into paying customers. This process involves a variety of activities, ranging from content marketing and SEO to PPC advertising and scheduling social media campaigns.

Navigating the Challenges of Staffing a SaaS Product Team

Building a competent and efficient team to develop, manage, and support a SaaS product is a serious task, accompanied by its unique array of challenges. A primary hurdle involves pinpointing talent possessing the appropriate technical skills and knowledge. The SaaS model requires individuals proficient in various disciplines, including cloud computing, data security, software development, and user experience design. Furthermore, since SaaS products often hinge on continuous delivery of value, the team must incorporate members skilled in agile methodologies who can swiftly adapt to changes in product development and strategy. However, sourcing and retaining this diverse talent, particularly in a competitive market where such skills are in high demand, may be arduous.

An additional substantial challenge involves creating a team capable of not just developing, but also managing and supporting the SaaS product after launch. Customer success is paramount in the SaaS business model, where recurring revenue and customer retention are crucial. Hence, maintaining a dedicated customer support team capable of resolving issues promptly and efficiently is essential. Yet, aligning the different team functions—development, management, support—toward a common understanding of the product and customer needs can be intricate. Addressing these issues necessitates a well-defined strategic plan for staffing, comprehensive training programs, and fostering a robust company culture that prioritizes collaboration and customer-centricity.

Avoiding the Side Project Pitfall

Considering the level of commitment required to create and manage a successful SaaS product, treating it as a side project can be a hazardous approach. If not allocated proper focus, attention, and resources, it is prone to underperformance or even failure.

The development of a SaaS product isn’t a “set it and forget it” proposition. It necessitates consistent monitoring, updates, and enhancements to stay relevant and competitive. This requirement is particularly crucial in a world where customers have an array of options readily available, and the costs of switching are often minimal.

Treating a SaaS product as a side project could result in inadequate attention for it to thrive. You might overlook customer feedback, market trends, or competitor activities that could significantly influence your product’s success.

Developing a SaaS product is an undertaking that warrants dedicated focus and resources. Treat it with the gravity of a standalone business, rather than as a side project. This approach not only amplifies the probability of the product’s success but also prevents it from diverting vital resources from your primary business.

Optimize Your Digital Product Journey

If you need help developing the strategy for a digital product or evaluate the cost of building an enterprise app, the team at Emerge can help. Our experts create and transform digital products, creating seamless and intuitive user experiences that drive customer engagement and increase revenue. We combine deep UX design expertise with innovative digital product strategy. Partner with us to create compelling digital products that meet your business goals, delight users, and propel your business forward.