Posts Tagged 'SaaS metrics'

The Nuts and Bolts of Being SaaSy

Last week I wrote about Zuora’s subscription manifesto and the differences between a technology vendor selling an on-premises solutions vs. a company that delivers a true SaaS solution (which I still believe must be multitenant). Today I read a great series called the SaaS Manifesto, written by Peter Levine, General Partner at Andreeson Horowitz. Part one is on Rethinking the Business of Enterprise Computing. Part two is on Focusing of Building a Real Sales Team.  The series draws from extensive first-hand experience and outlines what it takes to truly become a best-in-class software as a service (SaaS) solution provider. Traditional enterprise software company executives should read it as they prepare for their future and SaaS company executives should review it as checklist.

I’ve been fortunate in my career to work with some real SaaS pioneers.  I’ve seen companies struggle and fail to truly embrace the SaaS model and others execute against what seemed like impossible odds. The first paper I read about “being SaaSy” was by Mark Trang, when he was at salesforce.com. The paper was called, “7 Habits of Highly Effective SaaS Companies.” I couldn’t find the paper, but here’s a great presentation from a 2008 Salesforce ISV event. In 2011 Matt Holleran, now founder and managing director at Cloud Apps Management, delivered a great Dreamforce presentation on the same topic. Some of this early knowledge sharing clearly had a positive impact on the so-called “Salesforce Mafia” –  check out this summary of Salesforce employees who have gone on to start companies. The Start-Up Cloud indeed!

Here are some of the best articles I’ve read over the years on best-in-class SaaS (in no particular order):

  1. Bessemer’s 10 Laws of Cloud Computing and SaaS
  2. 9 Worst Practices in SaaS Metrics
  3. SaaS Metrics 2.0: A Guide to Measuring and Improving What Matters
  4. My Top 10 Year One SaaS Mistakes. Save Yourself Some Pain & Just Don’t Make Them Yourself
  5. Should Your Startup Go Freemium?
  6. Marketing SaaS Solutions to Enterprises: Seven Hazards to Avoid
  7. SaaS in the Enterprise and the need for social selling
  8. HubSpot’s Best Practices for Managing SaaS Inside Sales
  9. SaaS Marketing: 21 Growth Hacks to Test Today
  10. How SaaS Changes an ISV’s Business Model 

Thanks to the authors for sharing their SaaS insights.  Of course I should also give a shout out to Behind the Cloud, by Marc Benioff.  And if you’re still working at an enterprise software company that has not yet begun the inevitable shift to the cloud and the subscription economy, I’m sure there’s not a day that goes by without somebody mentioning Clayton Christensen and the Innovator’s DilemmaEscape Velocity by Geoffrey Moore is also excellent.

What’s missing? Got any more “Best in SaaS” articles or best practices to share?

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Shifting to SaaS: The Keys to Success for On-Premise ISVs

Loraine Lawson at ITBusinessEdge wrote an interesting post this week:  Analyst Says On-Premise Vendors Struggling with Shift to SaaS.  I added a comment, which I thought I’d post here for feedback:

Hi Loraine, I enjoy your blog and agree with most of your points about the challenge for on-premise vendors attempting (or not attempting) to move to the cloud. Having worked for pure-play SaaS application vendors (Salesforce and LucidEra) and enterprise software vendors (Business Objects and now Informatica) I’ve experienced the religion on both sides of the fence. My belief is that it is possible to be successful in both camps (to mix my metaphors) but the following ingredients/steps are necessary:
  1. There must be executive level commitment to developing a SaaS/cloud business.
  2. There must be a recognition that SaaS requires both a business model shift (in terms of sales, marketing, pricing, packaging, etc.) and a significant product shift (must be multitenant, must be easy to implement and use, etc.).
  3. There must be a focus on the right metrics (ACV, TCV,  and MRR as well as sales and marketing metrics.).
  4. The right compensation model must be in place if you expect your traditional sales team to sell the SaaS solution. And if you’re selling to a different buyer or market segment, a different sales team (typically inside) is required.
  5. There must be a laser focus on customer success. A multitenant SaaS offering allows you to monitor usage, deliver frequent releases, and get to know your users in a way that’s never been possible with on-premise software. And subscription pricing requires you to ensure that adoption and ROI is high.
Salesforce.com has published a great whitepaper called “7 Habits of Highly Successful SaaS Companies” and people like Phil Wainewright have written quite a bit on this topic. The fact is, while it’s easy for the pure-play small vendors to take shots at the big (and profitable) players, there are a few who have followed the steps I mentioned and continue to execute.
When I was at a pureplay SaaS application company founded by people who lived through some of this at Siebel we delivered a presentation that hit a few of these points. I’ve linked to it below.

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