Top tips for selling SaaS

Director Cloud Practice (EMEA)

Kevin Collins, Director Cloud Practice (EMEA)

In my last blog I covered the key challenges and benefits of implementing the SaaS model. In part two of the SaaS series, I’d like to offer some top tips for selling SaaS.

 

What’s the right SaaS model for you?

So you have decided to build your own application and it is now time to take it to market; but where do you start and what is the right model for you? Well first of all you have to decide if you are going to just licence your software and have a third party support it or you are going to stand up the software yourself and deliver it out as SaaS. While the first option may seem appealing due to the fact you are only selling software and licences it does come with a number of drawbacks:

  • You may have a service provider licence programme but essentially you will look like any other software vendor and that’s a competitive market place
  • You will have to manage all software updates for the partners or customers you have, whereas if you stand up a SaaS you have centralised control
  • You will have to train the partner or customer to set up and maintain the solution. With SaaS they just have to understand the user interface
  • Badly implemented solutions are likely to reflect badly on your software, even if it’s not your software that’s at fault
  • Ultimately you lose control of your intellectual property.

Delivering as a SaaS does mean that you will have to manage the infrastructure but the service providers are more mature now and can take much of the headache away, leaving you to get on and deliver a great software service to your customers. This is where you have to make your next decision: who is going to host your service?

 

Hosting and SLAs

Different service providers offer different packaged services; from basic infrastructure, where they offer an SLA only around the resource you consume and you manage everything else, to fully managed PaaS services, which not only include the platform but could also include backup, DR and even a managed database service. The choice is down to a balance between the level of control you want and the cost of management. The next point to consider when picking your service provider is ‘will your customers have data residency issues?’ in which case does your service provider have a DC in the countries you want to trade in? Last but not least, what sort of SLA are your customers going to demand and how are you going deliver it? It’s much easier to deliver an SLA if your underlying SP has the same SLA, i.e. you want 9999 up time and your SP offers 9999 up time.  Otherwise, you have to build the extra resilience into the software, which can add considerable complexity to your solution.

 

Pricing models

So you have decided to stand up the solution and offer out SaaS and you have picked you service provider; now how do you price this service so you can make money and yet be competitive?

Let’s start with granularity under the pay as you go model. Customers only want to pay for what they use, therefore the more granular the pricing the more comfortable the customer will be. Charging for concurrent connected users is a popular model as you only pay for the software when the system is running. The final charging model will depend on the type of service you are offering. For example, if you are data mining then you are likely to have only a few connected users but consume large amounts of resource, so concurrent connected users probably won’t be profitable. The other factor that can affect granularity relates to third party software you may be using in your service. If that is priced in three-month increments then that is likely to be the limiting factor.

Next, you have to decide what to charge; you could just divide the cost by 365 days in the year, but that is not exactly ground-breaking and is unlikely to succeed in the new world of SaaS. You have to be flexible and offer innovative price plans to your customers. Here we can learn a lot from the telecom providers. If you think about it the technology is essentially the same across all the big providers and the differentiation comes with how those services are packaged to meet the different customer usage requirements. This should be the same for SaaS, as in my opinion, success in this market will rely on innovative pricing plans.

 

Access and extensibility

Unlike on-premise software solutions, you can’t offload security as someone else’s problem; you have to ensure your solution is robust enough to be exposed on a public network and meets all the industry standards required for a multi-tenant service. Remember your reputation is only as good as your first breach.

With the increased popularity of BYOD within the industry, the most successful SaaS providers offer services that are compatible across all software platforms. These not only include Mac and Windows desktops but also smart devices running on iOS and Android.

Extensibility will become key as SaaS matures. Your product is unlikely to run in isolation within a customer’s enterprise and so how you pass data in and out of your system could be the deciding factor in whether you service succeeds over the competition. As stated in my last blog, other partners will be looking to integrate your service into a cohesive business solution for their customers, so the more support you can give them, with full featured APIs and pre-packaged connectors, the greater your success will be.

 

Where is ‘value add’ going to be delivered?

With traditional solution sales, the end user often has a direct relationship with the vendor for support e.g. if a piece of EMC kit goes wrong, an EMC engineer comes out to fix it.  In an XaaS model, however, the sale is to the next link in the chain.

This is for good reason and is demonstrated in the following example. An IaaS supplier sells resource to the SaaS provider, the SaaS provider then sits their software on top of it and the integrator packages it up with other services for an end customer. As a result, when problems occur they must be traced back through the layers of service to the point of origin within the supply chain, with each provider signing off to say the issue is not within their part of the service. That being said, it’s essential to know your supply chain well and document where your responsibility starts and ends.

 

In our third blog in the SaaS series we will explore the role of the SaaS integrator. 

 

Posted under Cloud Computing

SaaS and the cloud: the channel should look to service provider models

Director Cloud Practice (EMEA)

Kevin Collins, Director Cloud Practice (EMEA)

SaaS (Software as a Service) and the cloud is in a state of flux at the moment with traditional hardware vendors delivering converged solutions to service providers who in turn are looking to grow their IaaS (Infrastructure as a Service). At the same time independent software vendors are looking to move their products to SaaS to meet increasing customer demands.

 

Gartner recently reported that 71 percent of organisations in 10 countries have been using SaaS for less than three years. According to the research, investments in SaaS are expected to increase across all regions; 77 percent of respondents expected to increase spending, while 17 percent planned to keep it stable.

Licence to SaaS

The interest in SaaS comes with end users seeing the benefit in not holding onto a lot of software licences for long periods of time. They now want to be able to use the right quantity of licences ‘on demand.’ If they’re increasing the size of their workforce, they want to easily be able to upscale their licences. The industry is beginning to look to a ‘pay-as-you-go’ approach through SaaS – something service providers have been doing for years and have had plenty of success implementing.

 

Dispelling SaaS myths

Implementing the SaaS model is not necessarily a ‘cheaper’ solution but what it can do is focus finances exactly where they’re needed. A company can reduce licence expenditure in ineffective areas of the business while trying out a new system more cost effectively: they don’t have to fork out lump sums up front. This dynamic approach to software usage allows a company to try out whole new business models utilising specific software solutions for say – six months – and still keep a grasp of IT expenditure.

 

I believe SaaS is on a journey right now – we have started with IaaS which is becoming more mature; customers are running this quite happily now in a number of key areas such as test and dev, DR and big data analysis. This will lead to larger PaaS (Platform as a Service) requirement as partners start to write their own software that end users will consume as SaaS.  Business partners are beginning to evolve their business strategies. While offering IaaS they are becoming aware that the real opportunity is with the applications and application integration. Some partners will switch their focus to building applications in the cloud, while others will integrate these disparate applications into a cohesive business solution; it is this area that is largely untapped and very interesting.

 

Look at LinkedIn, Facebook, Google Mail and Twitter – they’re all managed independently and all have their own interfaces. Now here is the challenge, could you synchronise all the contacts across these applications? Probably yes. Could you segregate it so LinkedIn and Facebook entries were keep apart but were all in your Gmail? With tags maybe. Would it be robust and reliable? I doubt it. Could it be done reliably by everyone without any IT skill? Realistically no.

 

Moving forwards in the Big Data business world, we really can’t work in those silos. Therefore as SaaS matures there is going to be a great opportunity for business partners to integrate those applications and build connectors which will enable data to flow more freely and securely between them. This won’t be a short term process – it’ll be over the next five to ten years.

 

Key benefits

Essentially, with SaaS, management overheads decrease considerably as the interface must be intuitive and therefore less complicated to use. It should be as easy as setting up a personal Gmail or Yahoo account and managing that on a daily basis. You can offload the software complexity to experts who manage it for you and the interface is something you just ‘plug in’ and use.

 

Key challenges

A key challenge is security. Let’s take your Google account again; what are the consequences of letting the world see your personal calendar as a friend of mine did. No big deal until I pointed out that I could see a party he had three months ago, which included his address on the invite and he was telling the world he was about to go on holiday for two weeks “so help yourself”. Now map that mistake onto your business, multiply it by your staff count and overlay your compliance and you can see the risk you are taking. This is where your companies IT staff will deliver their value in the future. Far from being redundant in this new SaaS world they will be there to work with the business partner to not only deliver on the SaaS that is being demanded by the business but also ensure it is done in a compliant, secure and efficient manner.

 

Learning from service providers

In the future it will become more important to remove yourself from the traditional ‘solutions sell’, or in other words, you sell a solution, move on to the next piece of business, returning in two years to hopefully repeat the process.

 

It’s a ‘hands on’ approach now, which is new to some partners in the channel. It’s about being in touch with the customer every single month and being flexible enough meet customer needs. Similar to the way a service provider works, resellers are dealing with smaller amounts of money up front but over the long-term, continuous billing can be rolled out to reduce customer churn and improve loyalty. Resellers offer the scalability service providers need. This isn’t going to be a quick win. Resellers need to work with trusted and experienced partners to help them to migrate slowly from traditional solution sales today to an annuity based XaaS business in the future.

 

Read our second blog in the SaaS series to learn ‘top tips for selling SaaS’ coming up next week.

 

Posted under Cloud Computing