6 Things SaaS Needs to do in 2009

Written January 20th, 2009 by
Categories: CEO's Blog
Comments Off on 6 Things SaaS Needs to do in 2009
VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Information Week published this article today with the sub-heading of:

Software as a service is making headway, but can't yet be called a
game-changer in the enterprise software market. Here's what must happen
for SaaS to gain wider acceptance in 2009.

I thought I'd take a stab at holding ourselves up against their scorecard.

  • Get Solid, Believable Commitments From Microsoft (NSDQ: MSFT), Oracle (NSDQ: ORCL), and SAP (NYSE: SAP).

"SAP made a big deal out of the Business ByDesign
SaaS enterprise resource planning suite for midsize businesses it
launched a year ago, but has since slowed down the roll-out, saying
it's having a difficult time making money off of it. In the coming year
it plans to develop SaaS functionality modules that hook into
customers' onsite SAP ERP systems, helping to protect its profitable software-licensing model while offering SaaS to customers in areas"

We're perfectly aligned with SAP's strategy of protecting their profitable software-licensing model.  We don't think B2B sellside eCommerce is a standalone application.  It HAS to be integrated with SAP in order to make sense and leverage all of the investments in the underlying platform!

  • Escalate From "Very Good" To "Excellent" Uptime Ratings

We're doing a great job of maintaining our up-time record.  If only those slouches at Salesforce.com and Google would do their part, the industry detractors won't have any sticks to throw at us 🙂

  • Offer Cheaper, Easier Integration

We're way ahead of the curve here.  Without cheaper, easier integration we wouldn't exist! Our service is 100% dependent…for better or worse…on integrating in real time with SAP.

  • Prove That SaaS Is Less Expensive Than Traditional Software

"What's needed from the analyst community are
more detailed research reports on the total cost of ownership of
various SaaS applications with comparable on-site software applications."

We now have had dozens of conversations that confirm that Total Cost of Ownership of SAP Integrated B2B sellside eCommerce websites minimally start at $300K of up front investment (hardware, software and consulting) and can easily approach $1M and months and months of effort.  Our costs are typically on the low end of that spectrum and we spread it out over multiple years.

  • Build A Better Record Of Profitability And Growth

"There's hasn't been another SaaS vendor that's matched the consistent revenue growth and profitability of Salesforce (NYSE: CRM),
which recently surpassed the $1 billion-a-year revenue mark and was
added to the S&P 500 (replacing the beleaguered Freddie Mac)."

It's going to be awhile before we hit our $1 billion-a-year revenue mark :-).  We're doing OK in our own right, but we'll be counting on the other SaaS players in the industry to make their mark on the industry.

  • Convince Customers That They Can Live Without Customization

"Most businesses have taken for granted the
ability to tweak and customize software to their liking, while
recognizing that each customization requires time and resources. But
one of the reasons SaaS costs less is because it's a one-for-many (e.g.
multitenant) application, which means little or no customization."

The good news here is that we can accomodate customizations without a lot of grief. 
The bigger issue we have is that many of these customizations serve to delay getting into production and unleashing value quickly.  Since we're an agile SaaS provider, we embrace a more iterative approach to releases. We don't think it makes sense to design and develop the "perfect" solution before you deliver a "good" but valuable solution.