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Software As A Service For Business
A Blog About Software As A Service
This blog is all about software as a service (SaaS) for business. If it is in the cloud, you will find it here.
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SEO In The Real World
Posted on June 22nd, 2009 No commentsYou know you may have a problem when you see something when driving and think "Wow. That’s a good example of search engine optimization." You are certain that you have a problem when you then take a photo of said location and blog about it.
The photo:
I apologize for the quality of the image. It was rainy, I was using my iPhone and I was in a moving car. Not the optimal conditions.
I saw the location as a web site, and the entrance you see here is their home page. The other entrance is right by the white car you can see underneath the sign. That’s a landing page.
Here’s what we see on the home page:
- Vegetables Flowers and Plants- This is their page headline, and they’re using an <H1> tag around it.
- Northshore Flower Exchange- This is their page title and the name of the site
- Plants and Flowers- This is their subheadline. They believe that the majority of people searching for what they offer use the words "Vegetables flowers & plants", but know that some people search for just "plants and flowers", leaving out vegetables all together.
On the landing page they have the same sign as #1. It feels like a landing page, as you can’t actually get into the parking lot there. You have to follow the call to action and drive around to get in. I’m reasonably certain that if they had a third road-facing side, they would have another large sign that says "Plants and Flowers". You know, for A/B testing purposes.
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Marketing Profs B-to-B Forum 2009
Posted on June 8th, 2009 No comments
Happy Monday.The good people over at MarketingProfs were kind enough to give yours truly a press pass for the 2009 Marketing Profs Business-to-Business Forum here in Boston. So I’ll be checking out all the sessions today and will be covering them on a few of my blogs: Blogstring.com, MarketingStartups.com, and BtoBSaaS.com.
The sessions I think I’ll be checking out:
9:00 am- 10:15 am- Bringing SEO In-House Without Missing a Beat
10:15- I’ll be running out to my car to feed the meter so I don’t get a ticket (fingers crossed)
10:45- 12:00- Developing Robust Online Content To Keep Prospects and Customers Engaged
1:45- 3:00- Make Every Investment Count: The Measure of Marketing
3:30-4:45- Putting Measurements into Action to Improve Leads, Conversions and ROI
After that, looks like there’s a cocktail thing and a dinner, which should be excellent.
I’ve decided to shy away from the Social Media types of sessions, as I’ve been to LOTS of them lately. So, if you’re here, be sure to say hello.
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Collective Intelligence And SaaS- Learning From The Community While Keeping Your Data Anonymous
Posted on June 3rd, 2009 No commentsI just read an excellent article on Cloud Ave entitled "The Cat is Out of the Bag (Again): The Hidden (?) Business Model in SaaS" which covers one of the truly unique (yet almost never talked about) benefits of SaaS: the ability to benchmark against aggregate community data.
While the article talks about community data in the context of companies that are going to sell anonymous aggregate community data, it does a good job at pointing out the benefits of benchmarking against live data:
Benchmarking has long been a lucrative business, practiced by research firms like Forrester, Hoovers, Dunn and Bradstreet, as well as specialized shops like the Hackett group - none of which were affordable to small businesses. More importantly, all previous benchmarking efforts were hampered by the quality of source data, which, with systems behind firewalls was at least questionable. Now that SaaS providers have access to the most authentic data ever, they can aggregate and process it, producing the most reliable industry metrics and benchmarking.
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Now clearly there’s a whole world of difference between selling aggregate customer data to advertisers, benchmarking, or sharing transactional data within your supply chain, but let’s now focus on what’s common in all these cases: new business models emerge, not simply representing additional revenue sources for the SaaS vendors, but also enabling them to deliver enhanced services to their customers, services that were simply not possible in the previous, behind-the-firewall fragmented data model.
Yes, this raises a number of serious questions: How far can SaaS vendors go? What are the security / confidentiality / privacy implications? Are they reselling data, or services based on data that the customer owns in the first place? If the customer owned the core data, who owns the aggregate? And just what is “aggregate enough” and “anonym enough”? The industry needs to address these issues as a first step towards a paradigm-shift: while current concerns about SaaS mostly focus on the security, privacy, and consequently isolation of business data, eventually a culture of controlled sharing for business benefits should develop.
Those couple of paragraphs make some great points about using community data for benchmarking purposes:
- Before now, small and mid-sized businesses simply couldn’t afford to pay for expensive research firms to give them "benchmarking"
- Even if they could, the quality of source data is questionable
- SaaS providers now have access to real, live data. The article uses the word "authentic" and I think that’s right on
The last paragraph brings up the point of data ownership and privacy/confidentiality, which is incredibly important. It calls into question notions of trust and security, both issues that absolutely have to be addressed by any SaaS vendor that features benchmarking based on live data. And when a SaaS company can ensure that the data displayed in benchmarking contains nothing that can identify any customer or company….well…..just imagine how awesome that will be.
Just picture it…..imagine being able to compare your data environment against others to find out
- If you’re paying too much for storage
- If you have a similar distribution of file types
- If your usage patterns are normal or out of whack
- If your security policies are as good as others
The list goes on and on. Hmmmm. I wonder if there’s a company out there building something like this.
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Weathering the IT Budget Storm of 2009
Posted on June 1st, 2009 No commentsI believe this may be the understatement of the century, but hey, I’ll go for it anyway: IT Budgets are not increasing this year. Yup, I know. Really stepped out on a limb there and took a chance, now didn’t I? With budgets in nearly every business unit being cut, it is no surprise that companies are trying to cut back on any new spending - even when it comes to mission-critical IT expenditures. And with mid-market IT managers expected to perfiorm miracles daily in order to keep everything running smoothly, how are they expected to maintain the same level of awesomeness with a smaller budget? Well, here are a few ways for IT pros to maximize their current environment.
First, let me take a few steps away from conjecture. Rather than just taking my word for it, let’s look at some real numbers on IT Budgets. Just today, IDC put out a report that IT spending will decline by 1.8% in 2009. That’s the bad news. The good news is that:
Declining information technology (IT) spending by clients will bottom out in 2009 and will experience marginal growth in 2010, market research and advisory firm IDC has said. Global IT spending is expected to grow 2.9% in 2010 before nearly doubling to 5.7% in 2012.
Okay, so if IDC is right, 2009 will be a year of doing the most with what you’ve got, while 2002-2012 should be a lot better froim an IT Budgeting perspective. So what can you do to maximize your current environment? Well, I’m glad I pretended you asked.
1. Save Money On Network Storage- All right, that’s an easy one, right? No? In theory, it should be fairly simple to figure out how to save some valuable dough on network storage. Some ideas:
- Find Old Files- Find out which old files can be archived, moved or deleted and get them off your network
- Find Files That Shouldn’t Be There- You’ve probably got files on your network that shouldn’t be there in the first place. We’re talking about MP3s, Movies, Family Photos and more. Your users shouldn’t be using your expensive network storage as their own personal entertainment center/ photo album.
- Find Out What Users/Groups are taking up the most space- Understanding the owners of data can help you with chargebacks or at least it can help you find the right size for their needs.
2. Find Out What Others Are Doing- How does your IT spending compare with others in your industry? What’s your storage and management cost per GB, and how does it compare with companies of similar size with similar retention and archiving policies?
3. Take a Look At SaaS/Cloud Offerings- Sure, I’m a little bit biased here, but you owe it to yourself to see if there are SaaS-based solutions that can both save you money and alleviate some of the burden of your IT staff.
Well, that’s just a start. I’d love to hear you other suggestions on ways to keep costs low to keep within a declining budget.
Nathan Burke is the marketing manager at Aprigo, a Waltham, MA-based startup developing online data management tools for IT Managers. To learn more about the company, go to the Aprigo site, or to sign up to be notified when Aprigo launches, click here.
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From Daily IT: The Three Waves of SaaS
Posted on May 26th, 2009 No commentsJust caught this one in my RSS reader this morning: Daily IT News has an article this morning on the Three Waves of SaaS. From the article:
As SaaS matures, we’re seeing providers evolve through three "waves".
Wave 1: Replace mature, single tenant software applications – The early players in SaaS got started by finding applications ripe to be delivered as a turn-key business service in a multi-tenant environment. Most early success among SaaS providers was just that: Taking an existing piece of software and finding a better way to deliver it.
Wave 2: Apply SaaS model to solve new problems that were impractical for existing mature single tenant software applications — Once these firms created an initial foothold, many realized that the SaaS model itself had inherent advantages for solving problems that could not be tackled in a traditional software model. They leveraged a common, centrally hosted architecture to get multiple companies working together, often across the globe, to solve a common business process.
Wave 3: Leverage "by-products" of SaaS business to launch new, higher value services — Now SaaS companies are realizing their whole business model actually produces assets that are quite valuable. Providers have a clear picture of how their software is being used. Over time, they can aggregate data collected through these interactions and report back to customers, giving them unprecedented insights into their individual performance as well as industry-wide benchmarks.
I think that Wave 3 is the most important and most interesting, and not many articles about SaaS touch on it. In many cases, the "by-product" is a mass of aggregate community data that can provide an excellent comparison feature and can be sliced by any number of filters.
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Results from the 2009 SaaS Marketing Survey
Posted on May 22nd, 2009 No commentsI’ve just recently started to read SaaS University, a site dedicated to SaaS business info, and today saw the results of the Softletter 2009 SaaS Marketing Survey. The survey covers the highest to lowest budgeted marketing programs at SaaS companies. Since I am a marketing guy at a SaaS company, these numbers were very interesting to me. So here goes.
Projected Marketing Budget Increases
Webinars took the top slot, as survey respondants also said they were the most effective marketing program. PPC campaigns took the second spot even though PPC efforts were rated last in effectiveness. SEO came in third, which makes sense as it has a high association with PPC campaigns.
Projected Decreases
Hmmm. I wonder why customer concern surveys are getting the axe. Are they just not producing results, or are they just easy to cut since they’re seen as a cost rather than a marketing tool. I’m really curious as to how many SaaS companies out there are really spending money on podcasts. Sure I’ve seen a few out there but not that many, and what are the costs? Additionally, what’s the cost of an official business blog? Unless these companies are associating a dollar figure with time spent by those producing the content, I’d be curious to see what they’re spending on.
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Clip: Why Do SaaS Companies Lose Money Hand Over Fist?
Posted on May 19th, 2009 No commentsJust saw this one in my RSS reader: there’s a blog from a stealth-mode SaaS company called Smoothspan, written by Robert W. Warfield that has a post today entitled "Why Do SaaS Companies Lose Money Hand Over Fist?"In the article, Warfield argues that SaaS companies spend far more on sales and marketing than their on-premise counterparts, and compares them in terms of how many sales and marketing cents are required for each company to earn a dollar in revenue. From the post:
Sales and Marketing
Let’s start here, because this is really the crux of the argument. It’s where SaaS companies spend the Lion’s share of their budgets, and where On-prem seemingly doesn’t spend much at all. Here’s what the numbers look like:t’s start here, because this is really the crux of the argument. It’s where SaaS companies spend the Lion’s share of their budgets, and where On-prem seemingly doesn’t spend much at all. Here’s what the numbers look like:
- SuccessFactors spends a ripping 56 cents for each dollar of revenue they bring in. Analysts expect about 85% growth in exchange.
- Salesforce is spending almost as much: 54 cents to bring in a dollar for which the analysts expect 44% growth.
- SAP has a much more frugal 29 cents per dollar brought in, but the analysts only expect them to grow 17.5% next year.
As a function of pure cost, SFDC and SFSF spend 2x what SAP does for an incremental dollar of revenue, which on the face of it looks highly inefficient. But, before we write the SaaS guys off, note that by spending so much, they manage to deliver 2.5X to nearly 5X the growth of SAP. Which one is more efficient? Not hard to make an argument for the SaaS guys when you look at S&M dollars as payment for growth.
He then goes into administrative costs:
General and Administrative
This is a category everyone loves to hate. It’s overhead that delivers no value. Surely the SaaS companies must be wasting a lot of money here? Large organizations benefit from economies of scale on G&A, don’t they?
- SFSF spends 21 cents on this for every $1 of revenue.
- CRM spends 16 cents for every $1.
- SAP spends 17 cents.
And R&D:
Research and Development
- SFSF spends 16%
- CRM spends just 10%
- SAP spends 21%
Finally, he tallies cost of revenue:
This is one of my favorites. Keeping the cost to deliver the service low is essential for SaaS companies. The fact SAP says they lose money on every sale of BBD is a direct reflection on this number. SaaS companies use a variety of technologies like multi-tenancy to keep costs lower, and it seems likely SAP has missed these tricks. We can’t get the numbers for BBD, but we can compare SAP’s cost to deliver software (largely cost to deliver maintenance, which is Tech Support) to the costs of a SaaS company:
- SFSF spends 24% to deliver their service.
- CRM spends just 13%
- SAP spends 22%
His conclusion is that SaaS companies could be just as profitable as SAP if they were to sacrifice growth for profit, but since SaaS as a delivery model is still young, companies are in the "land grab" process. They’re more interested in growth than profit in this stage, so it makes more sense to spend when spending equals growth.
Now, obviously this post is basing its information on SaaS specifically on CRM SaaS products, but I wonder if the same strategy extends to all SaaS players vs. their on-premise counterparts.
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This Weekend In SaaS- A Roundup of SaaS stories
Posted on May 18th, 2009 No commentsYou know, I knew that SaaS as a topic of blog posts was really starting to heat up, but wow. I’m gone for two days and my RSS reader and inbox are jammed with new articles. So I thought I’d do a quick roundup of the posts that were most relevant. Here goes.
The Widening Gap Between SaaS Demand And Supply- At Avigdor Luttinger’s Blog, the post talks about the growing demand for SaaS-based software and the slow growth in supply. From the post:
So at present we have a growing demand for SaaS, and a stagnant supply of some 40 successful SaaS solutions that has little chance to grow and match the demand for more variety, due to the technical and financial barriers mentioned above. Consequently, we could expect some M&A activity as successful SaaS vendors would acquire failing traditional vendors with good IP, and then start porting that IP to their platforms. But that would take a few years – until new solutions become available in quantity.
Which means that we have a growing vacuum – on one hand stagnant supply, and on the other growing demand.
Over on Technocratica, Dr. Jim Butler has a great SaaS design checklist. His post describes the security, SLA, Subscription Servicing, External Services, Resource Sharing, and Flexibility/Extensibility. I had the pleasure of working with the good doctor at a previous company and can say with 100% confidence that the guy knows his stuff. Awesome post.
At edd blog online, Jeffery Fehrman has a post entitled Cloud Computing - Who’s Watching Your Back? Mr. Fehrman seems to really dislike the idea of having data hosted by a third party, and at the end of the post, he invokes the "police can search your data without a warrant" argument. From the post:
Oh yeah, and the courts have ruled that the police can search your data without a warrant, as long as others hold that data. If the police want to read the e-mail on your computer, they need a warrant; but they don’t need one to read it from the backup tapes at your cloud provider.
Another emerging trend this weekend was the "Google went down for a couple of hours, so that’s proof that SaaS and cloud computing cannot be trusted" theme.
Google Outages Raise Questions About Cloud Future- this article, by Nicholas Kolakowski asks whether cloud-based services are really ready for the enterprise. From the article:
The downtime experienced by Google on 14 May, the latest in a series of temporary shutdowns experienced by cloud-based service companies throughout 2009, evokes one of those questions of burning importance to the enterprise: Are cloud-based services truly ready to meet business needs that require virtually continuous uptime?
Google’s occasional shutdowns reliably bring a great deal of media attention, as with the February incident that took down Gmail in the United States and the United Kingdom for about 2.5 hours. A few months before that, in August 2008, Google Gmail and Google Apps underwent 15 hours of downtime.
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"If your revenue is based on being able to stay in contact with people, and you have an outage, it can build to significant levels of damage quickly, so your tolerances are tight," Rob Enderle, an analyst with the Enderle Group, said in an interview.
"The outages that Google experiences [don't] happen in a well-run enterprise," Enderle added. "I’m not sure Google gets the enterprise; even with Microsoft, it took them bringing in employees from places like IBM before they understood it. Google has not yet gone through that process, even with a CEO coming out of Sun—it requires a fairly large infusion of people who get the enterprise."
The Industry Standard has two posts, Cloud computing: Pros and cons and 10 cloud computing companies to watch.
VM times has an article on IT Management In The Clouds With SaaS, which talks about the evolution of IT Service Management from local storage to the cloud. From that post:
This IT Management evolution was all made possible due the maturity of SAAS, (Software as a Service), going main stream. Over the last years we have experienced an escalation of applications migrating from the desktop to the Internet. Apparently, the physical conditions of both the Internet and network infrastructure have matured enough and made the economic option of SAAS the obvious solution.
First of all, it’s always about the numbers. Now, organizations can question whether it is sensible to purchase, configure, host, maintain, air condition, and backup. Suddenly, worrying about application software and hardware is optional. Alternatively, for a fraction of the cost, a company can “rent” applications remotely using a PC browser or a cellular browser and they can do this anywhere and any time, 24×7.
All right, that’s all for today.
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Is SaaS Consolidation Inevitable?
Posted on May 15th, 2009 No commentsSramana Mitra has an article on Forbes.com today predicting that SaaS consolidation is highly likely, and wonders whether that’s a good thing. From the post:
The global recession, which has forced companies to cut operating costs and streamline information technology operations, has been something of a boon for the software-as-a-service sector, with major companies turning to cloud computing. Thus, I expect to see acquisitions in the SaaS space this year. SaaS companies like NetSuite, SuccessFactors and Citrix, which all recently reported solid quarters, are likely targets. Let’s take a closer look.
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My concern remains that we may be moving towards yet another "too big to fail" industry structure. If HP, IBM, Cisco, Microsoft and Oracle go around acquiring everybody and their mother, we’re in for stagnation in innovation, a precarious concentration of industry power and leverage at the very tip of the pyramid, and an overall undesirable structural evolution.
SaaS is an opportunity for smaller companies to accumulate their own muscle, roll up their own smaller kingdoms and create an alternative power structure. I would much rather see that happen, than an accumulation of everything that matters into one of the five largest players!
Interesting article, and I understand this is really an opinion piece. She would rather see smaller companies in the SaaS sector. I get it. But when it comes to consolidation, remember, it’s a choice. Small SaaS companies don’t have to agree to be acquired by the big dogs. While some companies will choose to sell to a bigger company, others out there will stick it out on their own. I agree with her outlook: with SaaS taking off, there will definitely be a wave of acquisitions. It just makes sense. But this, like any other trend in tech, will be a self-fulfilling cycle. People see that SaaS is hot right now and form a SaaS business. Bigger companies acknowledge that the trend is hot and start acquiring SaaS companies. Other people see that SaaS companies are being acquired and decide to start their own SaaS startup.
It reminds me of the time of internet company acquisitions when "we’ll build something, get users for free, then Google will buy us" was a viable business strategy. Seems like a crazy idea now, right? The reason people tried that strategy is that it was working for others. Bigger, more established companies were acquiring tiny startups just because they had users. This led to a new wave of companies that counted on the acquisition trend to keep on going. When it stopped, companies were faced with a difficult challenge: find a way to make money with all these users. Those that were able to find a way to do that survived. The rest vanished.
I think the same thing is going to happen in SaaS. There will be a wave of acquistion followed by a wave of new SaaS companies looking to be bought out simply because they’re SaaS based. The big guys will stop buying them out just on the basis of SaaS, and the small SaaS companies will have to figure out how to make it on their own.
But hey, I could be wrong. It happens.
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Clip: SaaS’s Spring Fling: Venture Community Bets Heavily on SaaS
Posted on May 14th, 2009 No commentsChristopher W. Cabrera, founder of Xactly has a post entitled "SaaS’s Spring Fling: Venture Community Bets Heavily on SaaS" which talks about the huge VC interest in SaaS vendors recently. From the post:
The latest cases in point are SaaS vendors Workday, which closed a $75 million venture round, and ExactTarget, which just last week attracted $70 million in venture funding. ExactTarget had to forgo an IPO late last year because of the economic downturn, but that hasn’t kept the VC community from regarding the company as a prime investment opportunity. Meanwhile, Workday has now raised a total of more than $150 million from investors who clearly believe in CEO (and PeopleSoft founder) David Duffield’s vision for SaaS.
My favorite part of the post, however, is in the beginning:
The SaaS battle continues to rage in some quarters, with traditional on-premise software vendors still fighting a vociferous rearguard action, even as some are slowly moving to test the SaaS waters for themselves.
Vociferous rearguard action? I love it.
