Software Startup? Go SaaS Now!

Why Sartup software solutions editors must develop a SaaS strategy:

Time-To-Market is important.
Time-To-MaximizedMarginAndMarketBreadth is even more important.

• SaaS allows to reach a broaden audience in a shorten time frame.
  - By cutting out deployment issues (when onsite integration of software components is mandatory you usualy find that most of the customers are geographically close to the startup location because you need to optimize the travel time and cost for your technical people...)
  - By allowing a Try-To-Buy sales conversion process.
  Giving a potential customer an easy and immediate way of testing your solution increases the probability of catching him up when he is searching for a solution to its business problems. If he/she is happy with your solution there will be less probability - an time - for this prospect to think about looking around for other solutions than yours...
  
• SaaS brings differenciation towards well established software vendors
  - Established software brands have developped sales channels, by developing a SaaS business model you will be able - at first - to skip this long, risky, and costly process. Established onsite local distributors are not likely to invest in learning how to sale a new startup developed solution, they are conservative at first.
  - Established software solutions were developed over years. For maximizing the development cost versus the sales volume those software are complex, they hold hundreds of great functions, they were conceived so that a single software solution would be saled to the largest audience. They thus are complex, their training phase is long and costy.
  - SaaS solutions are light, easy to understand, they do not handle hundreds of functions but the few which are asked by some vertical markets. The SaaS solutions are easier to maintain, they can be very quickly adapted to changing business needs.
  
• SaaS eases cash management!
  - On Demand power and virtualized hosting of your SaaS solutions allows your startup company to spend OPEX cash as you grow. As your customers base grow you rent more power.
  - SaaS recurring revenues is a more predictible stream of cash which helps your startup company in growing up.
  
• SaaS is about up-sale and cross-sale
  - By partnering with a SaaS dedicated services platform you will be able to resell other SaaS solutions within your solutions portfolio. You will up-sale and increase the margin per user. You will prevent other distributors to get in your customers budget and compete with you.
  - By partnering with a SaaS dedicated services platform you will be able to partner with other solutions vendors and integrate more closely your solutions with their solutions to the benefit of the customers, and you will benefit from cross-sale strategies.

Software Startup? Go SaaS Now!

SaaS offering will eventually satisfy SaaS demand

SaaS is about simplifying its everyday's life. To achieve this goal a company needs to have a coherent governance strategy. Which means that once you have tried - often by starting with a SaaS based emailing solution - and perceived the benefits - no hardware nor onsite maintenance services issues, higher level of services quality, ubiquity, no inhouse upgrading issues etc. - you want more solutions to be available.

If you use a mix of onsite servers and offsite SaaS solutions you still face integration issues, you still have to pay for the cost of onsite hardware and software which hides most of the benefits of Opex SaaS. Some companies would then think - they often mistake themselves - than SaaS is not the right answer to their daily problems. Other companies follow the right path wich lands to "SaaS is great, the optimum benefits will occur when all the professional solutions my company needs are available as SaaS solutions".

Of course those latter orientations are still fewer than the others, mainly because even if SaaS is becoming more familiar it is still mostly unknown to most of the small companies. They simply do not know that these solutions and benefits exist.

But most of those who tried want more solutions to be available. When they catalog the solutions they use, and search for SaaS based equivalents they do not find a matching offer. Why ?

Because most of the solution providers face a common dilemna: they think that the only choice they have is either keep on developing their software solutions as they always did OR develop a SaaS oriented solution. They face the issue which sticks every market: change management! They have to think in a different way than they always did, their teams have to do so, their resellers channels have to do so, and they conclude that their consumers would not be ready to do so - which is false.

The solution providers should face the reality: they can keep developing their existing software solutions AND start a SaaS stragegy development.

When enough SaaS based professional solutions are available the market will shift. This is a kind of chaos theory behaviour. There is a turn point - which is close to be a reality - when offering will be equal to the minimum needs of companies. There will then be much more companies who will use 90% to 100% SaaS based solutions. These companies will get the optimum benefits out of SaaS. They will let others know about it because they will be able to save more money, they will be much more adaptative to environment changements, and they will be much more efficient than their competitors.

Solutions editors who still ask themselves about a go/nogo issue will then start working on SaaS bases solutions in parallel with their existing portfolio. Offering will be greater than the initial demand and the growth of the SaaS market will be exponential. This will be the sparkling that will light the business market and will eventually change the way we use computers and software solutions. As more solutions are available their integration will be easier. A mass market is based on common criteria - standardization of integration protocols. Companies will benefit from business solutions without having to endorse all the pains of being at the same time the consumer and the plumber. They will pick up the solutions they need, which will integrate and adapt to their needs.

Computing is about to becoming a utility.

Focus your energy on the Try-Buy conversion process

SaaS is about micro-marketing. After conceiving a Blue-Ocean strategy you already worked on several communication canevas which will drive targeted customers toward your dedicated mico-websites.

As a SaaS solution provider - being an ISV or a SaaS marketplace portal - you need to spend time and money on processes which maximize your recurring margins.

Focus your energy on the Try-Buy conversion process!

Optimizing this conversation rate means:

• your blue-ocean strategy works
• your segmented targets find your micro-site when they seek for a solution
• your communication canevas convince them that your SaaS solution is their answer
• your positioning and trying cinematics ease their decision to try your solution
• the trial phase demonstrates that the benefits you exposed are the one they are looking for
  
• your SaaS solution is adopted by the 'about-to-be' customers
• the trial scenario and data matches their business needs
  
• the trial-to-production environments are seen as a single and same SaaS solution
• at the end of the trial the customers have already found how to satisfy more than 90% of their initial needs and expectations

Focusing on the try-to-buy process will drive efficiency and maximize your recurring margin. You will achieve a high conversion rate while at the same time reducing the future cost of your help desk support. Calls to your support team will drop significantly after 30 days if customers experienced a great try-to-buy process. When seeking for a long-tail business model you will thus increase the number of users without increasing your operational support cost at the same rate.

You will then get a rising number of satisfied customers which thus will also help you optimze your churn rate!

The ISVs challenges of delivering Software as a Service

By far the largest percentage of the total cost of software ownership is in operations. Here is a list of many capabilities that ISVs find they need to operate a SoOftware-As-Service solution successfully:

· Business

o Automated customer and end user account provisioning
o Usage metering, reporting and analytics by user and customer
o Automated billing and collections with usage detail
o Product cross-sell and up-sell during customer support calls
o Easy integration of third-party solutions to boost up-selling capabilities

· Operations

o Datacenter management
o Production application monitoring and administration
o System configuration management, fast server provisioning
o System performance analysis and capacity forecasting
o Firewalls, intrusion detection, data security
o Tier 1 and 2 customer support
o Disaster Recovery, including user and account level data backup/restore
o Data migration and transformation
o 24/7 break-fix support
o Controls for compliance with audit standards such as SAS 70, PCI, SOX, etc.
o SLA management

Many ISVs interesting in delivering SaaS will quickly decide that it is less expensive and more strategic to partner with a SaaS pure player hoster who can operate and support their production systems at peak efficiency and reliability.