How to Respond to SaaS Competition – Fast !

Stay ahead of the curveStay ahead of the curveHow to Respond to SaaS Competition

– Fast!

MarketShare, Inc.35 Main Street // Suite 8Wayland, MA 01778Tel: (508) 647-0330www.softwarepricing.com

Stay ahead of the curveStay ahead of the curve

www.SoftwarePricing.comMARKETSHARE, inc.

© 2007 MarketShare, Inc 2© 2007 MarketShare, Inc 2

Agenda

• Introduction• Long-Term Changes• Impact Assessment• Potential Actions• Wrap-Up




IntroductionMarketShare• Unique focus since 1987

> Pricing computer software

• Practice areas> Value-Driven Pricing> Value-Based Selling> Strategic Discounting

• Results> Improved financial performance> More value from products & services > Increased sales effectiveness




IntroductionSaaS Creates Excitement!• Start ups and their investors• Journalists, analysts, consultants• Disaffected customers• Traditional vendors on autopilot• Something new for everyone

> SW folks are addicted to “change”> So are customers…

… but not when it affects business processes




IntroductionWhy the Excitement?• Something new

> Easy to try/buy/use> Single priced access, maintenance and support> Low price points> Bite-sized chunks of products> Standard, web-native software> Centralized incremental updates> Remote management of infrastructure

• Something old> Speed and customer service (Consumer marketing)> Old-style computing (Timesharing, Mainframes)> Early desktop apps (Simple, Compact)




IntroductionSaaS Causes Long-Term Change• Extends meaning of “Product”• Challenges industry business model• Delivers broader customer benefits• Changes competitive playing field




IntroductionTakeaways• Some companies more affected than others

> Little change required for the lucky few

• Near-term actions possible> Can blunt competition> Can make you more competitive

• Go back to fundamentals> Business planning> Customer segmentation> How you create real value

• What doesn’t kill you will make you strong




Agenda





Long-Term ChangesExtends Meaning of “Product”

• Product• Modules• Services• Maintenance• Support• Payment

• Product• Modules• Services• Maintenance• Support• Payment• Product structure• Payment structure• Infrastructure• SLA• Vendor risk




• Limited feature set• Packaging simplicity• Ordering flexibility• Uniform ongoing payments• Relationship driven

Long-Term ChangesChallenges Industry Business Model

• Feature laden products• More complexity• Standard terms• Hi upfront; low ongoing payments• Transaction driven




Long-Term ChangesDelivers Broader Customer Benefits

SaaS FeatureCustomer Benefit from SaaS

Self-provisioningEase of administration

Price levelBilling termPayment flexibility

Simple to use, installFaster time to value

Incremental releasesLess operational disruption

AccessibilityEasy deployment

Easy to trialCustomer service orientationLower implementation risk

IT and SW from one vendorMore accountability

Payments aligned with benefitsSmall packaging incrementsLess financial risk




Long-Term ChangesAlters Competitive Playing Field




Long-Term ChangesWhat to Do?• Who needs to respond?

> Most vs. least affected

• How to respond?> Greatest impact on prospects/customers

• When to respond?> Timing, pace




Agenda





Impact AssessmentExisting Vendors• Usually have an edge

> Products work> Have customers, revenue> Established track record

• History can be an issue> Business practices> Reputation in market> Installed base needs special handling

• Change can be hard> Have something to lose> Maintaining growth, profitability> Executives avoid career-limiting moves




Existing VendorsEvaluate Your Position




Impact AssessmentEvaluate Your Options• Framework for evaluation

> Which SaaS benefits to deliver> What it takes to deliver the benefits

• Delivering benefits requires action• Evaluate actions

> How long will it take?> How much will it cost?> How hard will it be?

• Assess overall risk




Evaluate Your OptionsWhich SaaS Benefits to Deliver?

H

H

H

E

E

E

H

H

L

L

S

S

S

F

F

H

H

H

L

L

Payment flexibility

Ease of administration

Customer Benefit from SaaS

Faster time to valueLess operational disruption

Easy deploymentLower implementation risk

More accountabilityLess financial risk

Overall Risk

How Hard

How Much

How Long




Agenda





Existing VendorsEvaluate Your Position




Potential ActionsPosition Determines Action

Mandatory dot-releases

Simplify user interface

Browser accessible

Premium support options

Flexible bill presentmentWeb-based license admin

Single tenant hostingUsage reports

Term-limited trial“Bite sized” products

Lower entry pricesChoice of payment plan

Potential Actions (Examples)

H

H

L

L

VendorRisk

Customer Benefit From SaaS


Payment flexibility

Faster time to value

Less operational disruption

Easy deployment

Lower implementation risk

More accountability

Less financial risk

IncumbentVendor Position







Browser accessible







H

H

L

L

VendorRisk



Payment flexibility



Easy deployment


More accountability

Less financial risk

Incumbent

Known

Vendor Position







Browser accessible







H

H

L

L

VendorRisk



Payment flexibility



Easy deployment


More accountability

Less financial risk

Incumbent

Branded

Known

Vendor Position







Browser accessible







H

H

L

L

VendorRisk



Payment flexibility



Easy deployment


More accountability

Less financial risk

Incumbent

Reputable

Branded

Known

Vendor Position




Potential ActionsPosition Determines Action Areas



Browser accessible







H

H

L

L

VendorRisk



Payment flexibility



Easy deployment


More accountability

Less financial risk

Incumbent

Reputable

Branded

Known

Vendor Position

Pricing &Packaging

Licensing &Billing

Product Development




Agenda





Wrap-UpSaaS is Part of Climate Change• Overall increases in …

> Industry maturity > Communication> Globalization> Commoditization

• Customer reacting to …> Budget pressures> ROI vs. risk> TCO vs. price

• Competitive pressures from …> Consolidation > Fewer Chasms to cross> Desperation




Wrap-UpAdapt to SaaS or Disappear• Typical responses less effective

> Technology> Features> Price cutting

• Business skills count more now> Understand and target customer need

… segment> Change the game

… new business models> Improve performance

… manage price and discounts

• Pricing models must evolve> Pay to keep Pay to use




Wrap-UpKnow Your Place




Wrap-UpFocus on Specific SaaS Benefits

SaaS FeatureCustomer Benefit From SaaS

Self-provisioningEase of administration

Price levelBilling termPayment flexibility

Simple to use, installFaster time to value

Incremental releasesLess operational disruption

AccessibilityEasy deployment

Easy to trialCustomer service orientationLower implementation risk

IT and SW in one placeMore accountability

Payments aligned with benefitsSmall packaging incrementsLess financial risk




Wrap-UpExploit Interim Tactics




Rewriting the SaaS LawsNo Need to Commit Your Soul (Commentary)

Comment I sometimes think I am living in a parallel universe when I get into conversations about Software as a Service (SaaS). People keep talking to me as if there is some kind of seismic shift taking place in the way organizations are acquiring and running software.

<snip>

So, my advice to organizations trying to figure out where SaaS fits … look at the components individually in the context of a specific requirement.

If all the elements seem relevant and attractive then SaaS is worth looking at.

If only a few have appeal, then look for the products, services and/or commercial terms that fit your requirement.

The bottom line is you don’t have to drink the Kool Aid and commit your soul to the church of SaaS in order to benefit from any of these things.

http://www.theregister.co.uk/2007/11/05/saas_freeformfynamics/




Thanks!

Jim [email protected]

MarketShare, Inc.508-647-0330

www.softwarepricing.com

See also: http://www.softwarepricing.com/experts/SaaS-Practice-Details.cfm

How to Respond to SaaS Competition – Fast !

Technology

Transcript of How to Respond to SaaS Competition – Fast !