running a world class saas organization
DESCRIPTION
by Dr. Richard Northing, SVP of Global Services, Flexera Software Presented at SoftSummit 2010TRANSCRIPT
![Page 1: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/1.jpg)
R i W ld ClRunning a World-Class SaaS Organization
Dr. Richard NorthingSVP of Global ServicesFlexera Software
![Page 2: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/2.jpg)
Agenda
• SaaS Market Overview and Trends
• SaaS as a Business Transformation for Incumbents
• Running a World Class SaaS Organization• Challengesg• Opportunities
• Best Practices to Consider
• Let’s Dispel a few Myths
2
![Page 3: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/3.jpg)
Industry Trend Summary
1. Pressure on businesses for less-capital-intensive alternatives and opportunities to operationalize costs
2 Widespread use of SaaS in companies of all sizes legitimizes the model2. Widespread use of SaaS in companies of all sizes legitimizes the model3. Rising maintenance fees from the "megavendors," such as SAP and Oracle4. Faster time to market and more-rapid ROI demand reduced deployment times5 Financial markets favor investments in vendors with predictable subscription revenue5. Financial markets favor investments in vendors with predictable subscription revenue
models6. Increased availability of broadband extends the viability of Web-based solutions
globallyglobally7. Opportunities exist in submarket segments, specific verticals, and within underserved
small or midsize business (SMB) market8 Increasing functional sophistication of SaaS vendors "standardized" user experience8. Increasing functional sophistication of SaaS vendors — standardized user experience
is now inaccurate9. Line-of-business buyers, constrained budgets and IT resources and a desire for rapid
deployment pressure the on-premises modeldeployment pressure the on-premises model10. The market is continually shifting as on-premises vendors acquire on-demand niche
players; market leaders extend reach, major new entrants challenge leaders
3
![Page 4: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/4.jpg)
SaaS and Cloud Computing Market SegmentsCl d A li tiCloud Applications
Software as a Service (SaaS)
Pure-play SaaSPackaged Software
ERP, CRM, Email, C ll b ti
Virtual Appliances for Packaged SW
High-Tech Manufacturers Virtual Appliances
Software + ServicesCollaborative Apps
pp
Cloud PlatformPlatform as a Service (PaaS)
App Development APIsA D l tApp Development, Web Infrastructure, Data Warehousing
Cloud InfrastructureInfrastructure as a Service (IaaS)
Servers,
Sources: Flexera Software analysis, based on IDC and Gartner
,Networking, Storage
![Page 5: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/5.jpg)
SaaS and Cloud Computing Market
CAGR 20%
CAGR 39%
CAGR 27%
Source: IDC, May 2010
5
![Page 6: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/6.jpg)
Packaged Software Incumbents vs. Pure-Play SaaS
Pure play SaaSPure-play SaaSLeaders
Source: Ray Wang, 2010March 2010
![Page 7: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/7.jpg)
Packaged Software Incumbents vs. Pure-Play SaaS
• Pure-play SaaS Providers: How do you run a profitable SaaS operation
h i t b k k d ?
• Incumbents: How can you transform your business to leverage SaaS and Cl d ti t d i l when growing at breakneck speeds?Cloud computing trends in a slow-growth environment?
• Pure-play SaaS Market– 2010 Market Size $10B– 2010-11 Growth Rate ~ 25%
• Packaged Software Market– 2010 Market Size $300B – 2010-11 Growth Rate ~ 5% 2010 11 Growth Rate 25%
– Strategic Imperative2010 11 Growth Rate 5%
7
![Page 8: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/8.jpg)
What are Incumbents Thinking?
1 Augment1 Augment (S+S)
2 Accelerate
3 Abandon
Other responses: “No plans for cloud computing”
Source: Flexera Software Virtualization and Cloud Computing Business Model Trends Survey, June 2010
![Page 9: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/9.jpg)
Software + Service to Accelerate Time to Benefits
Mathworks Parallel Computing Toolbox (Desktop) + MATLAB Distributed Computing Server (in the Cloud)MATLAB Distributed Computing Server (in the Cloud)
• Program on the desktop• Compute in the cloud
Source: Company website
9
![Page 10: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/10.jpg)
Software + Service: Augmenting CAD Software
Autodesk Revit (Desktop) + Autodesk Seek (SaaS app)
• Design on the desktop• Search for parts online
(stored in Amazon S3)
Source: Company website and Youtube videos
10
![Page 11: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/11.jpg)
Why is SaaS a Business Transformation for Incumbents?Incumbents?ChallengesSwitching from the “cocaine” of perpetual license revenue to deferredSwitching from the cocaine” of perpetual license revenue to deferred subscription revenue is a major business transformation
Others:• Revenue recognition• Contractual SLAs• Contractual SLAs • Security and data privacy• Availability and scalability• Sales compensation
11
![Page 12: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/12.jpg)
Making the Transition• Build vs. rent?
• What building blocks are available?What building blocks are available?
• Plan for scalability
12
![Page 13: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/13.jpg)
Business Advantages of SaaS• Solve the customer’s full business problem vs. just technical/functional needs• Better understand the customer
– Behaviors More than 95% of SaaS– Behaviors– Usage Patterns– Ceate Up-Sell and Cross-Sell Opps
• Deploy new capabilities faster and incrementally
implementations do not use a large enterprise external service • Deploy new capabilities faster and incrementally
• Faster, self-service implementations• Technology exchanges and the SaaS ecosystem
provider (ESP)/system integrator*
• All customers on single release - lower support and engineering costs• Recurring revenue model!
Recurring Revenue Model
* Source: Gartner 2010
13
![Page 14: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/14.jpg)
Cross-sell and Up-Sell
At Login
Via Email
14
![Page 15: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/15.jpg)
Usage Report
15
![Page 16: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/16.jpg)
Running a Successful SaaS Organization
Total Cost of Service for SaaSProvider
Total Cost of Ownership for End Customer
Source: “SaaS Model Economics 101”, Joel York/Chaotic Flow
16
![Page 17: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/17.jpg)
SaaS Operations Best Practices1 Develop clear SLA around availability and performance1. Develop clear SLA around availability and performance
• Ensure all departments understand commitments/obligations. Avoid deviation from standard.2. IT operations must be customer and business-aware
• By understanding the value proposition IT Operations can plan and react accordinglyBy understanding the value proposition IT Operations can plan and react accordingly3. Build architecture to scale and support SLAs
• Allow real time software deployment and maintenance4 Stringent controls around software deployment4. Stringent controls around software deployment
• Customer facing change control5. Build high touch customer management model
• Subscription renewals will drive revenue growth• Subscription renewals will drive revenue growth6. Develop Sales Compensation plans that match business plan
• Are multi-year deals important? What are goals of SaaS business vs. perpetual7 Use knowledge of customers behavior to drive roadmap and upsell7. Use knowledge of customers behavior to drive roadmap and upsell
• You know so much more about your customer than for on premise software8. Enable self evaluation, self start up wherever possible
S b i ti l ill d i th• Subscription renewals will drive revenue growth9. Make the solution “open” though comprehensive APIs
• Customer adoption will be higher through ease of data input and retrieval
17
![Page 18: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/18.jpg)
SaaS Myths• SaaS costs more in the long run than comparable on-premises software
– Usually the result of comparing apples and oranges…such as comparing a SaaSmodel that has fees tied to usage (e.g. $/email account/month for corporate e-g ( g $ pmail) to an on-premise product that is monetized through a perpetual license ($/mail server). Also consider ongoing support and maintenance.
• Risky to have critical information and IP located offsite, outside my firewall
– The availability security and data archival operations provided my the leadingThe availability, security and data archival operations provided my the leading SaaS players are typically far superior to that provided by the average enterprise IT organization. Backed with SLAs, validated through vendor selection.
• Little opportunity for Professional Services in SaaS model – Customer self-evaluation /startup and the availability of abundant APIs reduces
the need for integration services But deep knowledge of customer behaviorthe need for integration services. But deep knowledge of customer behavior provides opportunity for strategic and business process consulting.
18
![Page 20: Running a World Class SaaS Organization](https://reader034.vdocument.in/reader034/viewer/2022051816/546fa0edb4af9f3a0b8b45f2/html5/thumbnails/20.jpg)
The SaaS Market
25% Growth 25% Penetration25% Growth(CAGR)
25% Penetrationof $220 Billion
Software Industry by 2011
$4025%
$40.5 B
$13.1B
2009 2014
20