SaaS Architecture
According to recent industry research, organisations already allocate most of their software spending to SaaS solutions, and this share continues to grow as customers prioritise SaaS for its scalability, simpler integration, and operational efficiency. To capture this market share, traditional software companies are increasingly shifting to the Software-as-a-Service (SaaS) model, as it replaces one-off sales with steady, recurring revenue streams. Beyond predictable income, SaaS provides easier scaling, faster product updates, and broader customer reach, which stimulates business growth.
In this series of articles, I’ll explore the key architectural changes traditional software must undergo to transform into a SaaS product. But before diving into the details, let’s take a quick refresher on what SaaS really is.
SaaS is a model where software is offered as a subscription or pay-as-you-go service rather than a one-time purchase. Instead of handling installations or maintenance themselves, users simply access the software online while the provider hosts and manages everything in the background.
To succeed as a SaaS business, traditional companies must move away from a project-delivery mindset and embrace service-delivery instead. This shift means focusing on three critical pillars: how you acquire customers, how you monetise them, and how you keep them coming back.
From a technical perspective, building a SaaS application goes beyond following traditional software development best practices. Engineers need to take into account SaaS-specific architectural concerns like tenant identity, onboarding, and isolation. If these dimensions aren’t carefully designed, the outcome can be poor scalability, limited pricing models, and high operational overhead. Let's look at how SaaS architecture shapes critical business outcomes.
Customer growth is a major driver behind the shift to SaaS. But if a company makes the move without modernising its application, outdated architecture can quickly turn into a bottleneck that slows growth instead of enabling it.
Profit margins can face pressure from many factors, and SaaS architecture is often one of them. A traditional deployment model, where every customer gets a fully functional, sometimes heavily customised instance, can quickly become inefficient as the number of customers grows.
Compliance responsibility shifts in the SaaS business model. While traditional software places the compliance burden on the customers' IT teams, SaaS providers must demonstrate compliance to multiple customers at once, often requiring them to pass challenging certifications.
Monetisation in SaaS typically relies on subscription- or consumption-based pricing. But shifting traditional software into this model can be tricky. Legacy architectures often lack detailed usage tracking, offer rigid metering options, and use monolithic designs that make granular billing far more complex.
Business agility gets a major lift with the SaaS model, but it doesn’t come automatically. Legacy deployment methods and outdated operational processes can hold back feature delivery and limit the pace of innovation.
Revenue expansion enables SaaS companies to grow by developing relationships with their existing customers instead of relying only on new acquisitions. With the help of consumption analytics, businesses can spot which features are highly valued and which are underused. These insights guide smarter decisions on where to invest in new capabilities and which legacy features may be ready for retirement.
Customer satisfaction plays a key role in retaining customers. For SaaS providers, that means closely tracking customer health metrics and responding quickly at the first signs of churn risk. With the right application architecture, these monitoring and intervention workflows can be automated and far more effective.
Even applications built natively for SaaS can still have architectural blind spots that create the challenges we’ve already discussed. For products that weren’t designed with the SaaS model in mind, the challenges are even higher. Legacy systems often come with capability gaps that limit business performance, which makes aligning the architecture with the business model absolutely essential.