a value based approach to business models
TRANSCRIPT
Goal
To develop a clear insight into the transition process from a traditional business model to the SaaS business model
Objectives
• Review the value theory in context of business models
• Review business model frameworks in context of the value theory
• Develop or extend the existing business model framework so that it is in sync with the value theory
• Create a business model description of the participating company and consolidate existing SaaS literature
• Compare and analyze the traditional, SaaS business models and SaaS trends in light of the business model framework
• Develop clear insight and draft recommendations
Methodology
• Qualitative research
• Case study approach
• Primary data (in depth interviews and customer survey)
• Secondary data (website, product brochures etc.)
Findings
• SaaS does not necessarily open up the long tail segment for all the companies => this is a choice for vendors
• There is a change in the value being provided under the SaaS business model, i.e.: service
• Customer needs was found to be the most important element of motivation to develop SaaS offerings
• SaaS creates customer benefits at three levels (Dean & Saleh, 2009) – Utility level (example: service instead of software) – Process transformational level (example: ability to enter and
manipulate data from any location) – Business model innovation level (example: transaction based
revenue, ecosystem partners)
Findings
• Number and importance of electronic
channels increases
• For example: provide customer self service in all phases of the sales cycle but also provide access to employees and referees via telephone, e-mail and social media
Recommendations
• Customer needs (value) should be at the heart of a business model
• E.g. sharing data with the accountant
• A balance has to be achieved between organizational value and customer value
• E.g. customer self service versus human responsiveness • E.g. pricing based on both costs and customer value
Understand the end results customers want to achieve by using your product
Recommendations
• SaaS companies should explore the ecosystem approach to
create, deliver and capture value • E.g. how to improve the customer’s business by providing
seamless upgrading of whatever component
• SaaS companies should try to create economies of scale wherever and whenever possible. Special attention should be paid to customer value while creating economies of scale
• E.g. partnerships with notary business, accountants, consultants, banks?
Recommendations
• Rethink revenue logic in light of customers needs, the benefits customers derive from using products & services, customers willingness to pay, cost structures and competitors pricing strategies (Woodruff 1997, Harmon, Demirkan, Hefley & Ausekils, 2009)
• Revenue model should change under SaaS – may impact PD
• Modify contracts that govern customer relationships and pay special attention to SLA's, security measures, liabilites, data backup and management, integrations and customizations
Contract model should change under SaaS – may impact PD
Recommendations
• SaaS providers should work towards building transparency in order to give customers clear insight into their processes of handling infrastructure, security and reliability, example: http://www.trust.salesforce.com (Botteri et al., 2010)
Status
Customer survey
• Exact: 251 responses
• AFAS: need to send out the customer survey
A BIG thank you to all of you for your support and cooperation
- Austin D’souza