What is Proof of Concept (POC)?
A proof of concept (POC), also known as a proof of principle, is a critical step for early stage SaaS startups to assess the potential success of a product idea. It enables the product team to test whether the concept is technically feasible and financially viable before raising funds for product development.
There could be other barriers, too, such as poor supply (think of rare earths), logistics constraints, inadequate quality control, or policy bumps. Developing a POC can help uncover many of these challenges and gather valuable feedback early on to ensure informed decisions are made without much risk.
Creating a POC is essential before developing a SaaS product. But if it does not pass viability assessment or fails to meet potential investors’ expectations, most founders will drop the idea without investing more time, money and resources.
A POC is not a prototype or a physical model used to test design and functionality. It evaluates a product idea, while a prototype is an early sample created to validate/improve product design and basic usage. A minimum viable product (MVP) comes well after a POC and prototyping, representing a usable version of the product with just the core features. MVPs can be used for testing and feedback.
Five Key Areas Covered In A POC
- The POC should explain the general idea behind a SaaS product, including its features, development costs, timeline, maintenance requirements and pricing. It also identifies the people needed to bring the concept to life.
- Founder/s should also define the product’s target market and analyse competition, market conditions and potential demand.
- If a company is already operational, a POC should include current and previous financials for covering development costs, as well as staffing, sales & marketing and miscellaneous expenditure. For a first-time venture, POC will be required but it won’t be able to produce financials. A clear financial plan should be in place to get investors’ buy-in.
- A POC should be able to determine if the SaaS product has a target audience with whom SaaS companies want to engage for marketing products. It should explain how they intend to use the product (casual versus professional usage) and whether there is a significant pain point that justifies paid usage. In brief, it will meticulously evaluate users’ needs and demands.
- A POC should outline marketing strategies to connect with potential customers. It should also provide details of important tools to be used for planning promotional activities and budget allocations.
Three Challenges Plaguing A Proof Of Concept
Stakeholders’ alignment: It is essential to involve key decision-makers while creating the proof of concept. If stakeholders are not present initially, it can lead to delays and difficulties in reaching a consensus at a later stage. Therefore, everyone who needs to be part of the process should be on board to iron out discrepancies.
Customer pain points: Writing a good POC depends on clearly understanding customers’ pain points and the best solution. Failure to identify these issues may result in a generic list of inane features rather than addressing specific needs. In her book Escaping the Build Trap, Melissa Perri puts product initiatives as the master tool to achieve the strategic intent, the guiding vision of an organisation. Hence, every product must create value for its potential customers, which must be reflected in a POC. Conversely, a wishy-washy draft can kill a sound concept and impact its launch.
Internal resistance: Internal resistance may arise when certain individuals within the company have disagreements or display concerns that can slow down the development of POC. So, it is crucial to identify and address these issues through effective communication and collaboration within the team.
Creating A Proof Of Concept In Seven Easy Steps
Developing a POC is critical, as it demonstrates the viability of a proposed product, underlines its scope/scalability and helps pinpoint risks and obstacles. Here are seven industry best practices to write a proof of concept:
- Set up the team to be involved in POC drafting. This should include decision-makers, product teams, writers and other stakeholders, as collaboration is the key.
- Start by defining the core idea of the SaaS product in the POC. It should mention what the product aims to solve, outline its objectives and list necessary resources.
- Answer essential questions such as the product’s feasibility, potential market and the technology needed.
- Some companies create a prototype for testing if the idea seems feasible.
- Provide an estimated timeframe and quantify efforts needed for product development. This will help with planning and resource allocation.
- Gather feedback from product teams, project managers and experts within the company for modifications, if necessary.
- If the POC is approved, create a proposal to outline the next steps towards product development.
