Running a World-Class SaaS Organization. Dr. Richard Northing SVP of Global Services Flexera Software

Transcription

1 Running a World-Class SaaS Organization Dr. Richard Northing SVP of Global Services Flexera Software

2 Agenda SaaS Market Overview and Trends SaaS as a Business Transformation for Incumbents Running a World Class SaaS Organization Challenges Opportunities Best Practices to Consider Let s Dispel a few Myths 2

3 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 model 3. Rising maintenance fees from the "megavendors," such as SAP and Oracle 4. Faster time to market and more-rapid ROI demand reduced deployment times 5. Financial markets favor investments in vendors with predictable subscription revenue models 6. Increased availability of broadband extends the viability of Web-based solutions globally 7. Opportunities exist in submarket segments, specific verticals, and within underserved small or midsize business (SMB) market 8. Increasing functional sophistication of SaaS vendors "standardized" user experience is now inaccurate 9. Line-of-business buyers, constrained budgets and IT resources and a desire for rapid deployment pressure the on-premises model 10. The market is continually shifting as on-premises vendors acquire on-demand niche players; market leaders extend reach, major new entrants challenge leaders 3

4 SaaS and Cloud Computing Market Segments ERP, CRM, , Collaborative Apps Cloud Applications Software as a Service (SaaS) Pure-play SaaS Packaged Software Software + Services Virtual Appliances for Packaged SW High-Tech Manufacturers Virtual Appliances Cloud Platform Platform as a Service (PaaS) App Development, Web Infrastructure, Data Warehousing App Development APIs Cloud Infrastructure Infrastructure as a Service (IaaS) Servers, Networking, Storage Sources: Flexera Software analysis, based on IDC and Gartner

5 SaaS and Cloud Computing Market CAGR 20% CAGR 39% CAGR 27% Source: IDC, May

6 Packaged Software Incumbents vs. Pure-Play SaaS Pure-play SaaS Leaders Source: Ray Wang, March 2010

7 Packaged Software Incumbents vs. Pure-Play SaaS Incumbents: How can you transform Pure-play SaaS Providers: How do your business to leverage SaaS and you run a profitable SaaS operation Cloud computing trends in a slow- when growing at breakneck k speeds? growth environment? Packaged Software Market Pure-play SaaS Market 2010 Market Size $300B 2010 Market Size $10B Growth Rate ~ 5% Growth Rate ~ 25% Strategic Imperative 7

8 What are Incumbents Thinking? 1 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

9 Software + Service to Accelerate Time to Benefits Mathworks Parallel Computing Toolbox (Desktop) + MATLAB Distributed Computing Server (in the Cloud) Program on the desktop Compute in the cloud Source: Company website 9

10 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

11 Why is SaaS a Business Transformation for Incumbents? Challenges Switching from the cocaine of perpetual license revenue to deferred subscription revenue is a major business transformation Others: Revenue recognition Contractual SLAs Security and data privacy Availability and scalability Sales compensation 11

12 Making the Transition Build vs. rent? What building blocks are available? Plan for scalability 12

13 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 Usage Patterns implementations do not Ceate Up-Sell and Cross-Sell Opps use a large enterprise Deploy new capabilities faster and incrementally external service provider (ESP)/system Faster, self-service implementations integrator* Technology exchanges and the SaaS ecosystem All customers on single release - lower support and engineering costs Recurring revenue model! Recurring Revenue Model * Source: Gartner

14 Cross-sell and Up-Sell At Login Via 14

15 Usage Report 15

16 Running a Successful SaaS Organization Total Cost of Service for SaaS Provider Total Cost of Ownership for End Customer Source: SaaS Model Economics 101, Joel York/Chaotic Flow 16

17 SaaS Operations Best Practices 1. 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 accordingly 3. Build architecture to scale and support SLAs Allow real time software deployment and maintenance 4. Stringent controls around software deployment Customer facing change control 5. Build high touch customer management model Subscription renewals will drive revenue growth 6. Develop Sales Compensation plans that match business plan Are multi-year deals important? What are goals of SaaS business vs. perpetual 7. Use knowledge of customers behavior to drive roadmap and upsell You know so much more about your customer than for on premise software 8. Enable self evaluation, self start up wherever possible Subscription renewals will drive revenue growth 9. Make the solution open though comprehensive APIs Customer adoption will be higher through ease of data input and retrieval 17

18 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 SaaS model that has fees tied to usage (e.g. $/ account/month for corporate e- mail) to an on-premise product that is monetized through a perpetual license ($/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 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 behavior provides opportunity for strategic and business process consulting. 18

19 Questions? Dr. Richard Northing

20 The SaaS Market 25% Growth 25% Penetration (CAGR) of $220 Billion Software Industry by 2011 $40.5 B 25% $13.1B