Posts Tagged ‘SaaS’

For the past few days I’ve been watching a discussion over what SaaS (Software as a Service) is. The interactions seem to have broken down into two main camps.

On one side, there are those who feel SaaS is defined by it’s technology platform, particularly whether it is single or multi-tenancy*. If you’re not using a multitenancy* platform, you can’t be profitable and you’ll fail. Period.

Just because a service provider does not have MT does not doom them to failure. If you have a very large scale customer, particularly in relation to the rest of your customer base, it may make sense to stand up a separate environment just for them.

The discussions have reminded me, a lot, of the old UNIX versus Windows diatribes 15 years ago. They were something along the lines of: Only UNIX for ‘real’ work; Windows for the ‘little people.’

If another major customer came along that might represent a 30% revenue bump, it just might make sense standing up yet another MT as ST instance for them as well. Is my business doomed? No. Very happy actually. Whichever path chosen, it would be economically driven.

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We are still early in SaaS’ (Software as a Service) life cycle.  It is not uncommon to come across open discussions as to the value of SaaS verses desktop offerings.  Recently I happened across one such discussion from the perspective of a developer.  Should they build new product/service offerings in SaaS and abandon desktop, client-side installations?

There are a number of myths that often come up in these discussions.  Many are simply the result of people ‘wanting’ SaaS, the next new thing, to be more than it really is…too soon.

Consider:

Myth:  “There are no up-front costs.”

Unless yours is a new business with no existing processes in place, you -will- have noticeable (direct and/or indirect) upfront costs when adopting new solutions, whether conventional or SaaS. At the most basic, there are real costs in converting your business (data migration, customization, staff training, …) from a legacy process to a new one. The larger your enterprise, the more integral your offering will be to the customer, the more likely there -will- be upfront costs.

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Odds are, if you are a small to medium business (SMB), you have considered using a Software as a Service (SaaS) provider.  A SaaS provider can let you do things like offload the burden of non-core (but essential) functions like email, workflows, and CRM.

When evaluating SaaS vendors, it is important to look beyond their solution offerings, beyond ‘features and benefits,’ and at the vendor itself.

Building on an earlier article (Selecting a Vendor—Things to Consider), there are some additional things to consider:

Financial

Regardless of a firm’s size, employing a SaaS provider is not without up-front costs. It can range from customization (e.g. workflows) to simple opportunity-costs involving staff retooling. You want to be sure you’ve not just spent a large % of your budget only to have the vendor abruptly close their doors (giving you a glorious opportunity to explain why you were caught off-guard).

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Came across an interesting HBR post by Anthony Tjan today, “The Pros and Cons of Bundled Pricing.” If you don’t have time to read it, Tjan discusses the respective benefits for customers and vendors, depending on which side of the fence the reader is on.

Personally, I enjoyed reading the post having sat on both sides of the fence as purchaser and provider of services, sometimes at the same time. It is a difficult dichotomy to balance especially if you are trying to negotiate for win-win relationships.

One thing I learned early on in my career is (when providing a ‘solution’) to

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Energy costs.

Ask yourself, why did the economy tank last year? A popular answer is bad mortgages leading to a collapse of the financial markets…and the dominoes just fell from there. But if so, then why did Europe and Japan head into recession (by a couple quarters, at least) before the US?

If you listen to the popular economist Jeff Rubin (http://www.jeffrubinssmallerworld.com), he’ll give you an earful on why it was really triggered by 2008’s run up in oil prices. Consider that in 4 of 5 previous recessions (we can’t say about this one yet, for sure), oil spikes preceded economic recession by about 12 months each time. Interestingly, 09’s spike was nearly 500% prior spikes. I encourage you to read Jeff’s book, or at least skim the related blog post, Financial Crisis or energy Shock? You Be the Judge.

So, what happened to us as energy sky rocketed, before last year’s collapse? We started

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Back in the late 90s, as we were enjoying the glow of the dot.com boom, Andy Grove, CEO of Intel,  predicted, “…all businesses will be internet businesses, or they won’t survive.”  Instead, companies adapted to having an internet component to their business.

Now, in the late 00’s and heading into the ‘10s, Software as a Service (SaaS) has become credible, taking its rightful place as a mature business concern.  Increasingly, traditional software vendors (and others) are realizing their product offerings can continue in conventional form (here’s CD/DVD, you install, and maintain) or as a service completely delivered via the web (SaaS).

I think the path of SaaS will be parallel to what we found after Andy Grove made his original prediction for the internet.  I do not feel, ‘all software companies will be SaaS companies, or they won’t survive.’  Instead, many will develop a SaaS component of their business.

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“Free”
by Chris Anderson
ISBN: 978-1-4013-2290-8

A couple weeks ago at my local bookstore, I happened across Chris Anderson’s (Editor of Wired) new book, “Free.” Anderson’s book is focused on the notion that due to abundance, digital content of all types tends to gravitate toward becoming ‘free,’ or, as inexpensive as to not be worth measuring. Case in point, when was the last time you worried about how many MB or GB of data you downloaded last month? He contrasts today’s digital economics (bits and bytes) with those of the atom-based world (physical stuff).

Rather than do a ‘review’ I want to look at my own experiences and how they compare to being ‘free.’ Read the rest of this entry »

A common starting point

The internet’s ubiquitous nature has made possible so much. If it were not for the internet (like the utilitarian ‘phone,’ it’s time to stop capitalizing ‘internet’) the notion of Software as a Service (SaaS) wouldn’t even exist. Yet while incredibly empowering, the internet can be incredibly devastating when it fails.

Saying, ‘…the internet is down…’ is often akin to using the ever popular Read the rest of this entry »

Generally considered Universally True: It costs more to get a new customer than to keep an old one.  Whether we’re specifically talking about SaaS providers, or not, this seems to be lost on so many businesses.  How much more profitable might a wireless carrier be, for instance, if they focused on keeping existing customers, rather than incessantly focusing on new?

Listening to the likes of quarterly reports from Verizon, T-Mobile, AT&T, for instance show companies focused on gaining more new customers than the number of old ones they lose. How much more profitable might they be if Read the rest of this entry »

Along the path I have followed, there are a few things I’ve discovered when selecting a vendor (or business partner). A few of the ‘popular’ ones I’ve discussed below. To help lend credence to my comments, you may appreciate my roles have included being a P&L head, product manager for a SaaS/BPO unit, global technical account manager, and doing joint-venture assessments involving some multi-$B concerns.

References
Requests for references create love/hate feelings, depending on whether you’re the one receiving the request. If you are making a major decision, such as outsourcing a key business process, you will be keenly interested in talking to others about their experiences with the given vendor. Any experienced vendor

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