The Critical Steps for SaaS Success

Do your company’s legacy apps make sense as Software as a Service (SaaS) offerings? Find the keys to a successful transition to SaaS in this article.

The rapid growth of the Software as a Service (SaaS) market is attracting a host of new players, ranging from an endless stream of startups to a widening array of existing independent software vendors (ISVs). Each has recognized the need to convert their legacy applications into more competitive SaaS solutions.

I often refer to this escalating competition in the SaaS market as the ‘Cloud Rush’ effect, and it’s clearly illustrated by the continuous flow of companies adding information about their SaaS offerings on THINKstrategies’ Cloud Computing Showplace. The site now boasts over 1,700 providers divided across more than 90 application, industry, service and enabling technology categories. Even still, I’m sure that this number represents only a fraction of the total number of companies vying for a share of the rapidly expanding SaaS marketplace.

Although there is little indication that the growth of the SaaS market is going to slow anytime soon, it’s inevitable that we’ll see significant consolidation and even a potential shakeout as the industry matures.

So how does a SaaS vendor gain a meaningful share of the market given the significant amount of “cloud-washing” that’s currently taking place, with many established vendors falsely rebranding their legacy products as SaaS solutions?

Step 1 — Target business inefficiency

Salesforce.com saw the inefficiencies in traditional customer relationship management (CRM) systems. Service-Now.com found the same problems in the IT service management (ITSM) arena. iPipeline has even targeted this issue in the insurance policy creation process.

Step 2 — Attack the inefficiency with a simple, intuitive solution

Businesspeople are fed up with the hassles of grappling with applications that keep them from accomplishing their day-to-day tasks. These folks are actively seeking alternatives that will make it easier to get their jobs done.

Step 3 – Focus on the business end user

Salesforce.com pioneered and set the standard for this tactic by targeting the disgruntled salesperson who was tired of putting up with traditional CRM systems like Siebel and more than willing to give something else a try. Today, the empowered end user is more prevalent, casting an even wider “Shadow IT.”

But in order to encourage this growing class of empowered end users to try and buy your SaaS solution, you have to make it user-friendly, business process-centric, and easy to acquire and personalize. In other words, you need to remove the friction from the acquisition and utilization process. And because you’re trying to appeal to end users whose requirements and expectations are constantly evolving, especially given the standards that are being set in the consumer Web, you have to architect your solution to measure every keystroke and design your GUI to continuously encourage user feedback.

This leads to the need for an agile development process that can keep pace with user demands and routinely roll out enhancements in an incremental fashion. The result will help you continuously improve the user experience while building a tighter bond with the overall user community. To ensure that community also includes third-party solutions that enhance your SaaS capabilities, you should establish open APIs and align your company with key players in your sector of the SaaS market.

While these SaaS best practices can’t guarantee success, failing to incorporate them into your corporate strategies, ongoing operations and go-to-market tactics will certainly keep your company from fully achieving its business objectives in the SaaS market.

This is a guest post by Jeffrey M. Kaplan, the Managing Director of THINKstrategies and Founder of the Cloud Computing Showplace. He can be reached at [email protected].