Kudos to David Skoks at For Entrepreneurs, who has created a really great blog site that’s full of good info. In particular, his post on SaaS Metrics is worth sharing because it goes into great detail on the economics of building a successful SaaS business – that is, selling software as a service.
Warning: Skoks’ article is not a typical (i.e. short) blog post. It’s practically a whitepaper (complete with charts and graphs), so give yourself ample time to read it. I think he’s really onto something with his breakdown of SaaS business goals: Profitability, Cash, Growth, and market share.
I commend the software companies who have made the transition to selling SaaS instead of installed software. It can be a tricky move, particularly in the areas of sales and marketing. SaaS businesses need to look at customers differently than when they sold installed licenses. The focus expands from just generating new leads / new customers all day long. They begin to also work the sales cycle of renewals to increase Monthly Recurring Revenue (MRR). Sustained success means a shift in how they market, as well. Think “retention programs” in addition to “demand gen.”
It’s interesting to watch the progression, as so many software providers switch to selling only SaaS. Many of our application partners (Quickbooks, NetSuite, WebEx, and many others) who once sold installed software have made the transition to SaaS. It’s not just the wave of the future. It’s the wave of right now.
So, even if you don’t sell software, you can still get “in the cloud” from an internal perspective and optimize your infrastructure by making it SaaS-based. It’s cheaper, more secure, and more reliable than the old way.
There are many different ways to approach it. At Bi101, we transition lots of different businesses to SaaS-based infrastructure and I can say for certain that long-term success and ROI requires each organization to examine their unique business and look for the biggest software / hardware capital expenses, whether it’s a pricey financial management application, CRM package, etc. Our consultants are here to help, if you want to continue the conversation.
