I'm sure not too many of us think any more about the "service" in "Software as a Service" definition. Could it be that this concept hurts SaaS as much as it helps?
Think of the typical list of things companies procure as a service. Electricity, water, telephone services, facilities are all typically procured as a service vs purchased outright. It's not an exciting category to be lumped with - at least in my opinion.
Compare that to the traditional way software has been sold. As an "On Prem" or perpetual license type. If a SaaS company and On Prem company are competing for a sale here's the typical assumption the SaaS provider makes: "Our service has a lower point of entry. Our service is 'pay as you go' which is better for you. Our service allows you to start slowly and ramp overtime. This aligns your costs with your value return in terms of a timeline which is great - especially in these tough times"
That seems pretty compelling compared to the On Prem guy who has to get a big up front license fee. He or she can't discuss all the compelling benefits of paying over time - they need a big up front fee. So here's what they do. They don't discuss it at all. They're not selling a service. They're selling a vision. All they should do is focus on "Once you've paid for this - here's all the things you can do." I think that's a more exciting place to sell. Secondly, that "we align costs with your value" gets re-interpreted into "There'll be no hockey stick value return for your company with that SaaS provider - every time you add someone they'll up your bill!" Here's an interesting example of the sales positioning. Why this is unique to SaaS vs OnPrem I don't understand but you might.
My point is I think SaaS providers tend to view their business model with rose colored glasses. This worries me for two reasons:
- I believe it's a lower common denominator race and not good for the long term health of the software development business
- I think it focuses less on providing the optimum customer offering which is never good
My belief? That SaaS companies should be offering both options. I think it's critical for SaaS to shake off the perception that it's only for the SMB market and/or a defensive play (vs strategic push) by ISV's
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