A very interesting interview with Mike Seckler about growing, scaling and adding value in a SaaS business. He started Employease in 1996 and then later sold it to ADP. Read the entire interview here.
Your app could be the best in the world but if it cannot scale then you are going to be out of business. Check out these slides from the CTO of Rackspace about scaling web applications.
I was recently at one of the Startup Saturdays and couldn’t help but notice the number of students gathered to start something in the coming years. Everyone had more or less a unique idea and all of them were going to do it using SaaS.
Be it online collaboration, hiring, developing, CRM, billing - there is one answer for all your startup needs - Software as a Service (SaaS).
This article points out from a SaaS user’s perspective how these services have made life easier for us new age entrepreneurs as compared to our predecessors (basically people who started before the year 2000).
I am going to put in points that help organizations using SaaS models to startup cheaper and stronger:
1. Low cost of entry:
One of the most important reasons why SaaS is such a favorite with entrepreneurs. SaaS is delivered to organizations as a subscription model, usually billed on a per user per month basis. This means that the costs are granular in nature and are incurred only as long as benefits are achieved. This does away with the enormously large up front payments and massive annual license fees.
2. Low hardware costs:
Since the application is hosted by the service provider, investing in expensive infrastructure is no longer required. All large initial investments on hardware, licenses, databases, ongoing overheads of employing and training IT staff, software and hardware maintenance and upgrades are managed by the software vendor.
3. Multitenancy helps:
All SaaS services are built on a multi-tenant architecture, such that one software is shared on the server by many people. Multitenancy not only helps cutting down costs but also helps in pushing out bug fixes and feature releases in a more efficient way. So as an entrepreneur, you do not need to worry about upgrading your package to avail of that swanky new feature on the software.
4. Scalability:
Your organization starts with a few people and unless you are doing something wrong will always scale up. SaaS models are applications built for the mass market. Such services can be upgraded easily to accommodate extra users at a nominal extra cost. In fact for many services I know, if you upgrade to a package with more users over a longer period of time, the costs are much less than running it on a monthly subscription basis.
5. Easy to implement:
These software’s are on the web and do not require any installation, let alone any changes for your end users to adapt to. You just need to launch a web browser to start using the software. There would be times when you are required to add an extension but this is not rocket science and people in your organization can easily adapt to this. Also, the time required to setup services is negligible compared to ASP’s.
6. Predictability:
All SaaS models are based on pre-defined fixed charges and pay as you go revenue models. This makes it easy for a startup to predefine expenditure and also to prepare for unplanned usages. When you know exactly how much you would be paying for something for a year, it is easier to plan ahead and mobilize resources.
7. Improves focus on our core business:
SaaS strategy not only eliminates the need for additional IT infrastructure spends, it substantially takes the burden off your internal IT staff. With the SaaS advantage, your staff does not have to manage upgrades, troubleshoot problems for generic software applications. This helps the company to direct limited in-house IT resources towards more business oriented initiatives. These business oriented initiatives are the ones that are usually un-out-source-able and require the focus of internal IT teams.
So, if you are a startup and are looking to get a structure in place for your organization, I suggest starting with SaaS while focusing your internal efforst on your core business for greater profits.
This article has been contributed by Rizwan from SutraJobs.com
On Nov 17, 2008, Sandhill.com wrote about the 10 Predictions for Software as a Service. Here are my views and comments on the predictions:
#1 Itʼs the product, stupid!
It is the product and has always been the product and the overall experience it gives the end user.
#2 Software without borders
Very true. Just like how social networks have opened up the boundaries. My prediction is that more and more enterprise SaaS solutions will look, act and feel like consumer based web 2.0 solutions.
#3 First impressions, first
Absolutely. In the web design world, users make up their mind about a website in 1/20th of a second. SaaS apps might be a little longer but if the app is clunky, slow, and not good to the eye then 1 minute might also be sufficient to close the browser and move on.
#4 Pinching pennies
Monthly recurring revenue and churn rate is also a very important metric.
#5 Tier 1 support reigns
It depends on the customer. Full-fledged support for small business customers might prove expensive. Most of the support should be self-help including video tutorials and dynamic FAQs.
#6 More product alliances
This is a must. You don’t want to be an island after all. Complimentary services will use API’s to create enterprise mashups.
#7 Video trumps text
Absolutely. No comment.
#8 SaaS for SaaS
This is called “Walking the talk”. Great way to reduce expenses.
#9 Grid computing muddle
No comment.
#10 Tech takes a back seat
As more and more SaaS vendors crowd the space, marketing (and mostly online) is going to differentiate one service from the other. It will be a level playing field again with the vendor with the clearest purpose and position will emerge the winner.
Ben Yoskovitz has summed this up pretty nicely here. Due to the market conditions and the slowdown of the U.S. economy it will no doubt be a tough year but SaaS business will do much much better once they weather this storm. Ultimately, in a bad economy is a small business going to buy software on a per cpu license model or pay-as-you-go model? Isn’t the answer obvious!
