Are You Really a SaaS Vendor?
Here's why the most successful SaaS vendors think of themselves as business-to-business Web companies - not software companies.
By Treb Ryan, OpSource
Mar. 12, 2007
Most software companies think on-demand applications are a replacement for traditional business software.
They couldn't be more wrong.
Sure, these software-as-a-service (SaaS) applications are sold as a service and paid for per-transaction, but they are developed, sold and delivered in the same manner as traditional licensed software.
The most successful software-as-a-service (SaaS) companies do not think of themselves as software companies selling software on-demand, but as Web companies with business users accessing a service over the Internet. These companies realize that to effectively start and grow a SaaS business, they need to act more like a consumer-based Web company than a traditional enterprise software company.
SaaS Vendors Must Rethink Their Identity
In order to truly leverage the power of the SaaS model, vendors must reconsider their base offering. SaaS applications that emulate consumer Web sites in the way they are developed and sold tend to achieve much more success than those that emulate traditional enterprise software.
Successful SaaS companies, for example, conduct iterative development and focus on multi-tenancy and agility. Marketing concentrates on attracting and growing the user base instead of trying to make big, one-time sales. In addition, the applications take full advantage of Web 2.0 technologies to help differentiate the product from traditional offerings.
Software companies that cast a blind eye to the Web-based model, whether originating online, migrating to SaaS or taking a hybrid approach, will find that the ever-winding road to success will be a frustrating excursion on the road to nowhere.
There are three ways to distinguish software vendors in disguise from true SaaS vendors. In order to be a Web company, SaaS companies must:
Develop Like a Web Company
The traditional software company looks at product development with long cycles in mind. Quality assurance procedures include testing for an endless array of configurations to meet compatibility standards. Further, the product cycle is focused on one major release per cycle; when development is combined with gathering user feedback, the focus of developers can be totally consumed.
Web-based development is far more iterative. Rather than issuing major releases annually (or even less frequently), Web applications can add new features on a quarterly, monthly and even weekly basis. Freed from the constraints of having to develop for a large number of platforms, Web application developers are free to focus on the user experience and application capabilities.
In addition, the Web provides a constant feedback mechanism. The Web company can see how its application is being used as it's being used. Analysis of what works well, or doesn't, allows for quick changes that can accent the positive parts of the experience or rectify a negative user experience. Smart, Web-focused SaaS companies often use agile programming techniques, very common in Web development, that allow a company to continuously interact with its users.
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They couldn't be more wrong.
Sure, these software-as-a-service (SaaS) applications are sold as a service and paid for per-transaction, but they are developed, sold and delivered in the same manner as traditional licensed software.
The most successful software-as-a-service (SaaS) companies do not think of themselves as software companies selling software on-demand, but as Web companies with business users accessing a service over the Internet. These companies realize that to effectively start and grow a SaaS business, they need to act more like a consumer-based Web company than a traditional enterprise software company.
SaaS Vendors Must Rethink Their Identity
In order to truly leverage the power of the SaaS model, vendors must reconsider their base offering. SaaS applications that emulate consumer Web sites in the way they are developed and sold tend to achieve much more success than those that emulate traditional enterprise software.
Successful SaaS companies, for example, conduct iterative development and focus on multi-tenancy and agility. Marketing concentrates on attracting and growing the user base instead of trying to make big, one-time sales. In addition, the applications take full advantage of Web 2.0 technologies to help differentiate the product from traditional offerings.
Software companies that cast a blind eye to the Web-based model, whether originating online, migrating to SaaS or taking a hybrid approach, will find that the ever-winding road to success will be a frustrating excursion on the road to nowhere.
There are three ways to distinguish software vendors in disguise from true SaaS vendors. In order to be a Web company, SaaS companies must:
- Develop like a Web company
- Sell like a Web company
- Leverage Web technologies
Develop Like a Web Company
The traditional software company looks at product development with long cycles in mind. Quality assurance procedures include testing for an endless array of configurations to meet compatibility standards. Further, the product cycle is focused on one major release per cycle; when development is combined with gathering user feedback, the focus of developers can be totally consumed.
Web-based development is far more iterative. Rather than issuing major releases annually (or even less frequently), Web applications can add new features on a quarterly, monthly and even weekly basis. Freed from the constraints of having to develop for a large number of platforms, Web application developers are free to focus on the user experience and application capabilities.
In addition, the Web provides a constant feedback mechanism. The Web company can see how its application is being used as it's being used. Analysis of what works well, or doesn't, allows for quick changes that can accent the positive parts of the experience or rectify a negative user experience. Smart, Web-focused SaaS companies often use agile programming techniques, very common in Web development, that allow a company to continuously interact with its users.
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