Scaling up your digital platform: do you choose a tailored or SaaS solution?

By 23 April 2020Uncategorized

Scaling up your digital platform: do you choose a tailored or SaaS solution?

There’s no denying it: all companies are becoming digital. During this digitization process, these companies often ask themselves whether they should use a tailored digital solution to achieve growth or if they should choose Software-as-a-sercice (SaaS) to support their new business models.

It’s important, however, to first have a clear idea of what you’re going to do before deciding how you’re going to do it. Technology is not the goal, but it should be the means. You can only make the right choice between a tailored digital solution and SaaS if you have a clear view of the solution. Simply put, there are three steps you have to take:

  1. Understand the problem
  2. Validate the solution
  3. Scale up using the right technology

1. Understand the problem

In many organizations, agile working is the standard nowadays, as is developing software within a Scrum framework. This way of working revolves around building the functionality that adds the most value to your business. My colleague Erik van Eeuwijk wrote a blog about this.

To be able to determine what adds the most value to your organization, it’s crucial that you have a clear understanding of both your business and your customers/end users.

OV-fiets (public transportation bike) is a great example of this. One of the main problems with the OV-fiets is that about 2,000 keys get lost every year, which is a huge number considering there are about 20,500 bikes. The NS (Dutch Railways) wants to decrease the number of lost keys and at the same time increase the OV-fiets’ availability. A smart lock that can be opened with an OV-chipkaart (public transportation pass) seems to be a great solution. After all, all the people that use an OV-fiets already have an OV-chipkaart.

Sources: Trouw and NS

 

2. Validate the solution

A good way of validating the (possible) solution is to create a pilot. Starting out on a small scale mitigates the risk of the investment. You would have to organize the pilot a little differently than you would if you would be exploiting the innovation on a larger scale. You could, for example, track your progress manually in Excel sheets or develop an app with the help of a low-code platform. Fine solutions, but they’re not really suited to be used on a large scale.

Back to the OV-fiets. Its newest innovation is introduced by way of a pilot: in December of 2019, 350 bikes at the trainstation of Apeldoorn were outfitted with a smart lock that can be opened by using the OV-chipkaart. The NS first tests the solution on a smaller scale through a pilot before investing in replacing the locks of the complete 20,500-bike fleet.

 

3. Scale up using the right technology

If your pilot was a success, you will know what to build and you will be able to scale up. If not, it’s back to the drawing board or quitting this initiative altogether.

Scaling up demands a different solution than launching a pilot. You’re looking for a robust solution that can handle the scale of your project. If it doesn’t work, this will be at the expense of customer satisfaction or it will cost you money indirectly.

This also holds true for the OV-fiets. You can read more about just how exactly robust software enabled the OV-fiets to grow to over 300 locations with 20,500 bikes and 5 million rides in the case on our website.

 

Tailored digital solution or SaaS?

So, when you’re choosing between a tailored digital solution and SaaS, ask yourself the following question: does this new innovation offer you a USP compared to your competitors?

Is the answer ‘yes’? Then choose a tailored digital solution. This software will support your core business, earns you money. Additionally, it’s what will separate you from the competition. You use a tailored solution to prevent competitors from copying your unique proposition. You don’t want this to be lying on the shelf somewhere else, because then your competitor can quickly copy you, meaning that you will lose your distinctive character.

“Use a tailored solution to prevent competitors from copying your unique proposition.”

Additionally, scalability is crucial, because it concerns software that directly supports your business model. You’re looking for a serious and robust solution, because it will cost you serious money if it doesn’t work. Consider, for example, a website that’s offline on Black Friday. This is the worst case scenario for big ecommerce companies, such as Amazon and AliExpress. In these cases, missed turnovers can amount to hundreds of thousands, if not millions, of dollars, euros or yen.

But when do you choose SaaS, you may wonder? SaaS is useful when we’re talking about some more generic processes. This will not help you to distinguish from the competition. After all, it only makes sense for a developer of an enterprise package to develop it when the market for selling licenses is large enough. So with SaaS, you’re not distinctive.

In practice, tailored solutions and SaaS often exist next to each other. For example, the customer experience of a bike-rental company is what makes its service distinctive from competitors, therefor you choose a tailored solution for this. However, paying for the service is more generic, so SaaS is often used for a payment process. You can connect the different pieces of software together through the use of APIs.

 

Using a tailored digital solutions offers distinctiveness

By choosing the right software, you create a nice firm foundation for successful innovation and to scale up your core business. That is why, at INFO, all our projects start out with a definition phase in which we form a vision on what we are going to build (product vision) and how we are going to build it (technology vision). Does your technology add enough value to your business and your customers and does it help you to distinguish from the competition? Then choose customization to grow further.

Would you like to know more about how to go from an innovative idea to a successful business? Send an email to elly@info.nl and we are happy to help.

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