If you have a great idea for a SaaS product or are still looking for one, before you decide, you need to know the following categories.
You have a great idea… Let me be straightforward with you and tell you directly that the idea is not the most important thing. If you have a fantastic development team, marketing and sales teams from Mars, and you have a product or idea in your hands, but the market you are trying to enter is not suitable, your chances of success are not high. However, if your resources as a team are modest but in a suitable market, your chances of success are much higher.
Let’s explore the categories of SaaS products but from the market or customer perspective.
Types of SaaS Products Basically, if your definition of SaaS product types is building a product like Email Marketing or CRM for sales or something similar, unfortunately, that’s not accurate. These are categories or classifications of the fields in which you can build a product. The precise classification is as follows:
- System of Record
- System of Engagement
- System of Decision
Okay, what do they even mean? Why complicate things?😅
Don’t worry, my friend, I’ll simplify it for you now, just continue with me.
System of Record
Simply put, you offer a product that is a system where you store information, nothing more or less. An example of this is old-fashioned CRM products where we used to store customer and sales data. You can apply this concept to any category. For example, if we focus the system of record only on social media branding, we can create a system that allows users to connect to their Facebook page and schedule posts at specific times, that’s it. You can build a system of record products in any field.
One of the successful companies in this system of record is Salesforce, which was founded in 1999 and dominated the market. Today, its stock price has surpassed Oracle, which was founded in 1979.
System of Engagement
The System of Engagement is essentially the same as the previous system of record but adds use cases or features that allow users to interact with others, such as their work team or manager. For example, you can build a CRM that allows the sales manager to add tasks for the team, such as scheduling customer interviews (sales calls). In this example, the user, who is a salesperson, can send a meeting invitation to the customer via email automatically, including the date and location of the meeting. Moreover, the user can see if the customer interacted with the email, such as opening it or adding the meeting to their calendar.
The same concept applies to any field. You can help users or teams collaborate by thinking about how collaboration will occur. Your goal is to build a product that facilitates this collaboration and achieves the goals of collaboration for any organization in the field where the product will be used.
If we go back to the previous example of the Social Media Tool, what can you do to make our thought about the system of engagement not just a record? If I were in your place, I would think about the workflow or the dynamics of teamwork. For example, they may think about the week’s posts in a fundamental way, then schedule when they will be published. The manager will then distribute the work to the team, conduct a briefing, and have someone write the copywriting, which will then be reviewed and approved by their direct manager. After that, it goes to the designer, and so on until it is scheduled for publication.
If you build a product that makes the team’s life easier in these steps and achieves the goal, which could be speed, quality, or flexibility in work, then you have built a successful System of Engagement.
One of the powerful products in this system is Jira from the company Atlassian, founded in 2002, which is expected to reach an annual recurring revenue (ARR) of around 3 billion dollars by the end of 2023. Source: Q4 and FY23 financial summary
Dstny Engage
Dstny Engage is one of the most powerful products that can be considered a System of Engagement created by Egyptian founders and acquired by the European Dstny Group in 2022. I am proud to be part of the team at the Egypt office.
Dsnty Engage is a platform that allows customer service teams anywhere in the world to communicate with customers and collaborate in distributing the workload. Moreover, it enables the use of artificial intelligence capabilities to assist your customer when the team is outside working hours. This can be utilized to increase sales or reduce the costs of technical support management if you have a dedicated team for it.
System of Decision
Now let’s move on to the last system, the decision-making or analytical system. Simply put, its purpose is to assist the user either in analyzing data related to their work or in analyzing competitors. An example of this is if you have a website, you probably use Google Analytics to track visits. If you work in marketing, you likely used SimilarWeb or Semrush to analyze your competitors.
The decision-making system can take various forms, such as software that can be used to gather data across different departments. Leaders in companies often use Business Intelligence Tools (BI Tools) for this purpose. Examples in this category include Microsoft’s Power BI and the well-known Tableau. Currently, there is a trend for new products that utilize artificial intelligence (AI) to serve the same sector.
One of the advantages of the decision-making system is that you may not necessarily need to build a system of engagement or record. Simply put, you integrate or allow the user to connect to another system and pull the data into your product, starting to consume it.
Convertedin
Convertedin is considered one of the globally leading Egyptian products in the field of marketing automation, serving as an example of a decision-making system. This is especially true as the product is based on artificial intelligence that analyzes advertising results and identifies suitable segments automatically across multiple platforms.
Your Go-To-Market Strategy
Now back to your idea; consider it from the market’s perspective. Is the market saturated in the system of record category that you are entering, or is it a market with little competition? If the market is saturated in terms of systems of record, do you think the market needs a system of engagement, and do you believe you can disrupt the market in that way?
Parasite Strategy
Do you have to build the system before creating a product for the system of decision or engagement? I have good news for you; not necessarily. You can build your product on top of another product that already has its customer base.
Take HubSpot, for example; it has over 180,000 customers from around 120 countries worldwide and generates about 1.7 billion dollars in ARR. The company knows that it can’t fulfill all its customers’ needs with its existing capabilities, and it focuses on specific products for success. So what did it do? It created a Marketplace, something like the Apple Store or Google Play Store. Simply put, you can create your product and add it to their store, making it available to HubSpot’s customers and millions of users, and you earn as well. This way, you hit multiple birds with one stone. You don’t need to create a massive product like theirs, and you also have a ready audience to sell to. Your cleverness lies in discovering what value your product can offer to this audience.
Gameball
One of the most successful Egyptian SaaS companies that succeeded in the Parasite strategy is Gameball, which facilitates building loyalty and retention programs for stores. In a short period, the company benefited from the presence of hundreds of thousands of stores on Shopify. It launched a product on Shopify’s marketplace and managed to acquire a significant number of customers in record time.
