How to scale SaaS business  from local to global markets? : Case of ad servers

University essay from KTH/Entreprenörskap och Innovation

Abstract:

This thesis will describe SaaS (Software as a Service) business in a global environment. The

prior focus will be to give suggestions of models and good examples of how to scale local

business into global markets. The necessary theoretical framework on software product and

scalability issues is given. Qualitative research is carried out to find out how the suggested

models are adopted among selected ad serving companies. The results from three different

companies were analyzed to find similarities and the extension of strategy described in theory.The main aim is to illustrate how scalability fits into each company’s business model rather thangain results for the whole industry.

 

Software industry is changing towards the SaaS business model. This paper describes the

significant advantages over the traditional software distribution. SaaS can be easily accessible over the internet and provide more scalability for software vendors. Apart from cost efficiency SaaS gives flexibility in maintaining and updating the product. Most importantly it enables vendors to tap into the global customer base, as there is less dependency on local distribution.

 

Scalability has become a major factor for the success of software vendors. The stability of brand solutions is challenged by fast growing startup companies. Main theoretical framework of scalability criteria lies on the Stampfl, Prügl and Osterloh (2013) model. It suggests most

important components of designing and implementing scalable businesses. General insight of market expansion strategies are based on Gupta and Govindarajan (2000) framework and

adopted to software industry.

 

Qualitative research methods were chosen for this study. Interviews were carried out with three vendors representing advertising technology companies. They qualified the important scalability issues and studied the strategies of expansion. Qualitative study allowed focusing on essential information that lies among the responsibilities of company managers.

 

Research result shows the similar path of scaling among the three interviewed companies.

Importance of experience among startup owners and the need of a first engaging customer are highlighted as crucial. Findings suggest vendors to invest in well-developed system

fundamentals that do not limit the scalability on later stages. Results prove that majority of

development is coming from existing client requests. They are treated with highest priority due to the nature of business to business relations. Nevertheless, categorization of clients is needed, to decide if developments should be entered in product roadmap. The strategy of “launch vehicle” was confirmed by one of the vendor which has several products on its portfolio. Global expansion is described in the theory and was discussed on interviews. SaaS companies express great strive towards scaling their business internationally. Presence on global software markets like US is treated as the only chance for winning competitors in a long run. They never stop looking for growth and exploring new possibilities that would help them getting there.

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