Quest Software SaaS Case Study

September 30, 2010

Check out this new case study on Quest Software’s transition from being a licensed software company to a SaaS firm. You have to have Gartner registration to access it, but if you do you can find the case study at www.gartner.com.

Quest moved to a SaaS-based log management offering. Their SaaS case study shows how significant the impact of moving to SaaS can be across the entire software business.

If you can’t access the Gartner case study, Microsoft also published their own case study about Quest Software’s move to SaaS earlier this year.

They’re both worth a read, if you’re a software company considering the move to a Cloud solution. For additional reading, check out this article about the important considerations when moving to a SaaS business model.

2 Comments | saas, software | Tagged: , , | Permalink
Posted by jlc

The Changing Enterprise Software Model

September 16, 2009

Yesterday, a panel of software leaders discussed the direction of the enterprise software model at the InformationWeek 500 conference. You can read about it here.

The panelists agreed that the enterprise software model is making the shift toward SaaS rather than on-premise application deployments. This is dramatically impacting software sales cycles as I wrote about before, with processes that previously took weeks or months now taking less than a day.

Clearly, SaaS is the wave of the future for greenfield applications and enterprise solutions. But for most enterprise deployments, there’s a legacy infrastructure and business process to contend with. In many cases, that legacy will dictate an on-premise solution as the only realistic near-term model. And in cases where the legacy infrastructure can be transitioned or integrated with a SaaS solution, that integration will in many cases take significant time, cost and resources. This is going to create (and is creating) new business opportunities for vendors and service providers alike.

Read more about the software market transition to SaaS here.

Leave a Comment » | enterprise software, saas, software | Tagged: , , , | Permalink
Posted by jlc

Ten Laws for SaaS Success

June 10, 2009

Want to know what SaaS metrics to use to be successful at Software-as-a-Service (SaaS)? I highly recommend this presentation by venture capitalist firm Bessemer Partners. From last fall… but still just as valid. Maybe more so as customer adoption of SaaS is really heating up compared to other software industry segments.

Here are the ten laws for SaaS metrics of success:

  1. The key monthly SaaS metrics are CMRR (Customer Monthly Recurring Revenue), Churn and Cash flow. Bookings are not a valid metric.
  2. The best indicators of long-term business health are Customer Acquisition Cost (CAC) and Customer LifeTime Value (CLTV).
  3. Tune the business before scaling it. Make sure you’re tracking to the SaaS metrics first. Keep sales team small and focus on each making >$100K CMRR.
  4. Pay sales people on CMRR not bookings.
  5. The most important channels are business service ones, not the traditional IT channels.
  6. Focus your marketing online, which is where your customers are and costs are lower.
  7. Keep your business local first.
  8. Focus: keep a single code version in production, support multi-tenant, and don’t do on-premise software also.
  9. “Service” is the most important element of SaaS.
  10. SaaS companies will need capital to last them 4 years – invest upfront in R&D and sales.

I think these are all really important points… ones to fully take to heart if you are trying to build a SaaS company.

The most critical mindset shift is #9: you are running a service business, not a software one. That means a fundamental change in culture and focus throughout the business.

#8 is important too – and one that needs planning out up-front before you sign up your first customers. The more profitable services long-term may be add-on services built on the value you can provide through aggregated data analysis. So think that through as you design your architecture, finalize customer contracts, and plan implementations.

If you need a SaaS business plan template that includes these SaaS metrics then take a look at our recently updated SaaS business planning package here.

1 Comment | saas | Tagged: , , | Permalink
Posted by jlc

SaaS Consolidation – Is it Time?

June 8, 2009

As the Software as a Service (SaaS) market is maturing, we’re beginning to see acquisitions and consolidation.

On Forbes.com, Sramana Mitra has an excellent analysis of the recent Intuit acquisitions.

I think she’s correct on the acquisitions/mergers directions for SaaS now it’s maturing.

The other driver is that as SaaS matures, the base services become commodities where it’s hard for providers to turn a profit. To build revenue they have to climb up the value chain by offering more value-add services on top of the base… acquisitions are a faster way for the larger SaaS consolidators to do that.

I think Intuit will likely be one to watch in this space, in addition of course to the likes of Google, Oracle, and Microsoft.

But not all consolidators will succeed – there’s a lot involved in turning a traditional software license-driven business into a SaaS model as I’ve discussed before in this article on the impact of software trends.

Leave a Comment » | saas | Tagged: , | Permalink
Posted by jlc

Follow

Get every new post delivered to your Inbox.