SaaS – chains and stacks…

Today Software+Services are defined as a broad area. To define the solutions and products beneath “SaaS”, we often talk about the SaaS Product Stack. This stack represents the complete list of solution and offerings, provided from consumer to enterprise wide applications.

What value these solution brings, are often referred as the SaaS Value Chain. But this chain, has only relevancy for venture capitalists, ceo’s and founders of SaaS companies, and end-customers should look towards, their own chain: The SaaS Customer Chain.

So how wo we define the SaaS customer Chain? This is a most relevant question to all in eager to succeed in software+service. What does the customer chain hold. The elements coudld be defined as follows:

Licensing, Billing, Support, Infrastructure Components, Facility Mangement, Capacity, Legal and Service Management

80% of all customer satisfaction within the SaaS market space, show that superb and customer-knowledge support is the key to prevent churn. So to take our elements and put then into order, I would argue the value chain looks like this:

  1. Customer Support
  2. Service Level Management – SLA & Legal Affairs
  3. Licensing
  4. Billing
  5. Hosting
  6. Facility & Capacity Management

When providing Software+Services, you have to give you customer a plain-vanilla, peace-of-mind expirence, and if not – superb support!

Danish datacenter Interxion in flames

Danish datacenter Interxion had a catastrophically fire, the night between Thursday and Friday. Over 50% of the capacity in the center ran out of power and was shut down.

The fire was not started by Interxion, but a transformation station controlled by DONG. The datacenter was fully operational at 07:45 Friday morning.

I can only say – this proves why you need to host your server and IT! 12 hours after Interxion had a problem, the systems are up and running. The infrastructure, the processes and the commitment are very professional handled by Interxion. Accidents will happen, but I would recommend Interxion at any time, for their efforts in this action.

Also look at the scenario afterwards – not many datacenter vendors have experienced such a catastrophically breakdown, and this will only better the service, delivery to the customers.

Well done Interxion – good to see you back on track!

 

Engaging the SaaS market

There is no doubt about it. SaaS is my ballgame. I love this business!

Software-As-A-Service, Software+Services or Application Service Providing (ASP) – is a business and a market! No doubt about it:

  • Pizza boxes are exchanged with fine French dinning
  • Cola are exchanged with Amarone
  • Late hours are exchanged with even more work
  • And the small field trips are exchanged with international business travels

To engage as a real SaaS player at this point of time, I recently made a calculation to prove a business plan. The immediate capital demand to ensure a spot in the market place is around USD $1-2 mio. and additional to this – 10-15 people. To become a SaaS player with a given footprint, end an exit-possibility within 2-3 year, you would have to invest in internationalization of the company profile within 1-2 year, and you would need substantial success and awareness on your product offerings.

Many adopters of the SaaS model are eager to ensure correct technical platforms, control panels and huge investments in fine, fine, fine servers, storage and certified/approved infrastructure. To start a SaaS company today, I would rather hire a big-shot business guy, that a technical geek. The market is a business and not an innovative platform, and you have to move from a prize-centric point of view to become a product/marketing, with a unique business opportunity and extremely well founded support for your end-customers. IDC released a report, showing that 80% of customer churn in SaaS are prevented by substantial and understandable support from a business angel – not a technical angle, as the market matures.

This will require a positive cash flow, lots of new investments – and this proves that fact, that entering the SaaS market, you cannot win by pricing. Differentiate your solution by segment, opportunity and products.

Segment, segment, segment – then target and execute!

Vendors are currently looking to the magic ball to see the next move on SaaS. Microsoft and Google are competing very aggressive to ensure their part of the market cap, but strangely IBM, Oracle and infrastructure vendors as Dell and HP are being patient. Their move is not to see, at the moment – but rest assure their look very hard to find their sweet spot in the marketplace.