Hosting Your SaaS Unicorn

By Dan Nichols on 25th July, 2016.

4 Factors To Consider When Building Your Billion Dollar
SaaS Start-Up

In the last decade, there’s been an undeniable explosion of SaaS businesses. These companies have changed the face of enterprise as we know it. And I’m not just talking about what they offer as a service. Booming SaaS organisations have experienced growth on an unprecedented level. Coined somewhat sensationally as “unicorn” companies, this rare breed of SaaS businesses are achieving billion dollar valuations in a rapid amount of time.

It doesn’t take too much of a stretch to bring to mind a famous SaaS unicorn (or ten). Think Uber, AirBnB, Snapchat and Dropbox. They are now as much a part of the fabric of modern life as computers themselves, and making the unicorn list has become the dream scenario for many tech start-ups.

Although this may be the ultimate goal for a new wave of tech entrepreneurs, the realities behind scaling from a small team to a billion-dollar company is a big step into the unknown. And in order to grow, and grow effectively, one of the most crucial factors for any software start-up is its hosting infrastructure. After all, without the right infrastructure in place, successful expansion, rapid or otherwise, simply won’t be supported.

It goes without saying that to attract the investment needed to scale-up, would-be SaaS unicorn companies need to build an impressive user database. But they also need to retain those users and make sure their onboarding process is smooth and quick for new subscribers. To do this the hosting infrastructure behind the scenes needs to be robust and flexible to ensure sustainable and rapid growth.

So if you’re a budding tech start-up, what do you need to consider when choosing the right SaaS hosting?

1. Focus on rapid scalability

Number one on our must-have unicorn checklist, is rapid scalability.

To scale-up effectively at unicorn speed, and keep your application working optimally from the user’s perspective one hundred percent of the time – you need hosting infrastructure that can scale responsively with your growth. But as we all know, there’s also the question of cost. As a new company, the budget isn’t always there for major infrastructure investments.

Private cloud or dedicated hosting platforms may uncomfortably stretch your start-up budget. You’d have to pay for new servers and storage upfront, before you’re anywhere near utilising its full capacity. This kind of strategy not only pushes the fledgling corporate bank balance at a crucial time for growing businesses, it also involves a certain amount of guesswork with regards to how much capacity you think you’ll need in the future.

Resource-based and pay as you go hosting models are a way round this upfront CAPEX investment. You can choose from a range of solutions that enable you to nimbly increase your resources in line with your needs. The more users you attract, the more resources you add. These cloud-based resource pools also allow you to plan effectively, adding and taking away resources as required to cope with (hopefully) increasing user numbers.

This cost effective, multi-tenanted way of supporting business growth is becoming increasingly popular with businesses of all shapes and sizes, not just start-ups and existing unicorns. Hyper-scale market leaders AWS and Azure, as well as the Virtual Private Cloud offerings (like Secura), use secure multi-tenant platforms to deliver rapid, incremental scalability.

One thing to be aware of with self-service, pay-as-you-use platforms is your billing. As you grow, so will your monthly bills. So make sure you keep an eye on what you’re using and which services you actually get charged for, to manage costs effectively and ensure you don’t receive any unexpected surprises at the end of the month.

2. Weighing up in-house vs external support

It’s a fact. You will encounter hosting problems along the line with any platform. We realise this sounds slightly pessimistic, but one of the most important points any tech company needs to consider, is how to resolve these problems when they do arise.

It’s a rare thing to find a SaaS company without in-house expertise. It goes with the territory. But have you hired an experienced hosting engineer? If you decide to move down the self-service route from a big provider, it may be a hire to consider. This nifty move not only takes the pressure off techies without hosting experience when things go a little pear-shaped, it also crucially means that disruptions to your service can be resolved more efficiently. If this sounds like the solution for you, remember to factor in wages and benefits for this role to ensure it’s something you can afford.

If this simply doesn’t fit with your team or business model, look into support costs from your host of choice but it’s worth noting, that many self-service platforms only offer basic support and in many cases, charging you extra as you add more support features. You may also have to reach a spend threshold to qualify for differing support tiers – so check before you commit your app to a provider.

If you use a digital agency to design and develop your SaaS app, then you may look to them to support its hosting infrastructure. Similarly, many agencies have specific terms around their support services. You need to be really clear on their level of expertise, what you get, and what’s not included before agreeing to anything. The big drawback with both of these options is you might not be able to get a personal, one-to-one service or there may be certain limitations to the support, like a lack of 24/7 assistance. Being aware of details like this and understanding what support is available if things go wrong, is critical.

Managed service providers on the other hand, will usually offer 24/7 support from hosting experts. This is quite often the best option for fledgling businesses from a support perspective if you don’t have in-house hosting expertise – if it works for your budget. But as with all routes, be thorough with your research. Check the SLA’s for response times for issues and requests. Find out where their support team are based, often this can impact things like telephone support services. And make sure they understand your bespoke needs. Without this, you may end up getting a service that doesn’t match your real-world requirements.

3. Stay classy, 24/7

The world we live in online is 24/7. So it stands to reason that your business must be available day and night. A disruption in service, amounts to a loss of users. And this kind of churn can be the quickest way to lose money, not to mention tarnishing your reputation along the way.

The question here is, how can you ensure that your service runs smoothly whatever the time of day, wherever users are?

From a hosting perspective there are multiple considerations when thinking about delivering a smooth and uninterrupted experience for your users. Is your infrastructure highly available? Will it tolerate a failure of hardware within your cloud (or dedicated) environment without significant downtime? What steps would it take to recover from a failure and how long that will take? Consider the worst case scenario, and form a strategy to get your application back online quickly and smoothly.

If your platform fails, do you have backup or disaster recovery? Do you have a platform with virtual machine failover if a VM develops an issue? Of course things can go wrong with cloud-based platforms, as with any technology infrastructure, so the key is to ensure your application can recover (hopefully automatically) if it fails. That way, your customers won’t notice the bump in the road.

This level of service for example, isn’t standard with many self-service cloud platforms. It’s something that comes at the cost of additional resources and will need to be built into your platform, often at application level. Again, it’s about knowing your stuff here, and taking the time to find out what your hosting package includes and how it will interact with your app.

The same process applies to companies on dedicated or private cloud platforms or those that are managed by a service provider or agency. Checking out what provision you have for backup or disaster recovery is a big must. Without it, you’ll struggle to quickly tackle interruptions to your service.

4. Sail through data storage and privacy issues

Most SaaS companies will come across the thorny issue of data storage at some point. You need to handle it effectively, so you can carry on providing your users with a great service.

If I asked you, do you know what data sovereignty is, would you know what I meant? You’d be correct in answering that data can be subject to the privacy laws of the country it’s stored in. So, even if you know this, do you have a plan to ensure it does not become an issue for your business?

To answer this second question with a resounding yes, you’ll need to know where your customers are based. Certain countries and industries, like the financial sector, have specific rules that effect data storage, where it can be kept and how and who, can access it. Differences in privacy laws between the EU and the US for example, can cause you problems if you’ve not taken them into account.

The obvious solution if this is a potential issue for a business growing internationally, is to use multiple data centres to neatly comply with any differences in regional regulations. You will also want to find out where your current provider hosts your application data. Users in Europe might not want their personal details being held in US data centres, particularly in light of the recent EU doubts over the safe harbour agreement. If you’ve got your eye on the unicorn list, this is one essential point to think about early, so you can grow across continents effectively and legally.

Consideration round-up: backup, DR and security

I’d be the first to admit that this checklist isn’t in any way exhaustive. There are lots of other factors to consider when sorting through your unicorn hosting options.

Backup and disaster recovery provisions are obvious contenders and I’ve touched on them briefly in the section on availability. Making sure you have a continuity plan in place with your provider is vital and that you understand the steps involved in how you will recover from a failure.

You should also have a good idea of how you can migrate to another host without too much difficulty should you need or want to. Does your application have hosting dependencies you need to consider (if you’ve programmed application level failover for AWS or Azure for example) and what is the length of your hosting contract and notice period?

System security is also a hot topic, and absolutely requires investigating. And you should always have steps in place to deal with the very real threat of hacks and DDoS attacks. This is particularly important for online businesses, as the high profile cases of Ashley Madison and PlayStation in both 2011 and 2016 show. But this is such a critical area it requires a more in-depth discussion in another post.

Hosting for SaaS growth is such a relatively unexplored area, the team at Secura would love to hear your thoughts. What do you feel needs to be included on this list? What do we need to expand on in the future? We’d love to hear from you. Just post your comments below.

Let’s Do This!

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We work with some of the biggest names in B2B SaaS in the UK, and our experts are ideally placed to give you the advice and guidance you need to get your hosting infrastructure setup for growth.

Call us or drop us a line with your details, and we’ll get in touch for a chat.

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Dan Nichols

Chief Technical Officer

As Secura's CTO, Dan is responsible for the team that design, build and maintain our cutting edge cloud hosting infrastructure. He is also the dishwasher police - stack it or else.

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