Two of the most successful SaaS companies are Salesforce.com and Digital River. By successfull I look at their topline revenue numbers and Y0Y growth. Salesforce.com obviously gets the lionshare of the attention. Digital River is what I call one of those "1.0" SaaS company's. They were SaaS before we even called it SaaS and they did SaaS because it was a core component to their value proposition.
What strikes me when I look at these two companies is the audience they sell too. Typically it's the VP of Sales. To put it another way - the person who has the revenue number on their head.
Why is that important? Well, firstly, there's a clear owner of the initiative which is important in any sale. Committee sales are notoriously harder and longer. Secondly the VP of Sales tends to have a few common elements to their profile if they're going to be successful. In turn, those tendencies bode very well for SaaS sales.
A good sales person knows a real objection from just noise. In addition, when they see a real objection they look for a legitimate way around that objection. Unsuccessful sales people usually get stuck at legimate but overcomeable objections. A good salesperson enjoys the challenge and overcomes the obstacle.
What's a sales leaders most important tool? Their SFA application. In the world of Siebel that was an expensive, complicated purchase and implementation mess. Envision the frustrated VP of Sales at the 18 month mark of a hobbled Siebel CRM implementation getting the call from some rep at this small online company called Salesforce.com. His initiative is bogged down with the VP of Marketing and VP of Support all arguing about which modules to buy and when. The CIO is complaining about an ever changing implementation road map based on the back and forth at the executive level.
Along comes this completely web based so no VPN issues. Simple and clean web pages that offered mostly intuitive functions. Understandable pricing on a per seat basis. Perhaps best of all - no integration! No more dependency on IT resources. The VP of Sales saw (at that time) an unconventional way to achieve his goals and the company's. A relatively cheap and painless but effective SFA tool. To add to that, early on SF.com struggled to win in the more complex CRM scenarios. They weren't considered "serious enough" for a company to rely upon for CRM vs just SFA. My guess would be that the CRM initiative was "Cross Functional" and thus much more prone to long complicated implementations.
Digital River involves e-commerce. A successful ecommerce implementation drives sales and a highly successful one drives significant incremental sales by effectively tying in astute online marketing. Again, the audience for their services tends to be the individual in charge of revenue. The alternative? Purchase an ecommerce on site tool or leverage a module attached to a larger ERP provider. What does that mean? Long lead times in terms of getting on an IT road map and secondly hiring or taking time to develop online ecommerce expertise in house. Not to mention incremental steps should you want to have a global store.
When choosing to implement a SaaS offering I think more attention should be paid to the internal buying politics at your target account. Large committee sales that don't have strong ownership are more likely to fall victim to internal politics that will reduce the likelihood of experimenting with a SaaS model. Services that have a straight line of site to a definitive budget owner and can be implemented as a "stand alone" operation for an extended period of time will do much better.
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