A fundamental principle associated with all business growth strategies is to deliver something that is differentiated and that as many customers as possible are willing to pay a reasonable price for. Obvious, right?
Then why do I keep hearing from people that are trying to conform to some kind of standard for packaging Software As a Service (SAAS)? They include requirements like a lot of items like the pricing model, the contracting model, the lack of professional services in the whole product, the lack of a rich client interface, etc. etc.
The conversations are really troubling to me as many people in what is otherwise an extremely innovative industry are putting themselves into a (SAAS) box, rather than being innovative and working both inside and outside the box.
If you want to build the best, most differentiated and valuable whole product for your customers, don’t be a SAAS militant. Rather, determine your most attractive target market segment, figure out what you can do to address its goals in the best way possible, and build the best whole product that you can to serve that market. Hopefully, your competitors will be SAAS militants and you will gain marketing share against them!
This might mean:
- You need to go without contracts (other than a EULA) or multi-year contracts even though you prefer annual contracts
- You can only bill them monthly or need to bill them for three years in advance even though you prefer annual pre-paid contracts
- You need to provide professional services (training, installation, creative, or other services) even though you would prefer self service
- You need to build a rich client for their desktop, laptop, and/or mobile devices even though you would prefer a pure browser-based architecture
- You need to offer your product on-premise for some of your customers or in the form of a software appliance even though you would prefer to run it in your data center (of course, the cloud may make this point go away)
- You need field-based sales even though you would prefer channel sales, inside sales or pure Internet sales.
Everyone has a favorite business model. I do too. The point is that it is not you or me that should decide, but rather the people that are paying for and using your whole product every day that WILL decide. You can still have your ideal model and test out approaches that are more in keeping with your notion of the ideal model from your company’s perspective.
As a firm that provides growth venture capital and significant business development services, we recommend this to all of our portfolio companies and enjoy competing against SAAS militants. Get outside the box and don’t be a SAAS Militant!