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  • 1. How to Respond to Stay ahead of the curve SaaS Competition – Fast! MarketShare, Inc. 35 Main Street // Suite 8 Wayland, MA 01778 Tel: (508) 647-0330 www.softwarepricing.com
  • 2. Agenda • Introduction • Long-Term Changes • Impact Assessment • Potential Actions • Wrap-Up MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 2 2
  • 3. Introduction MarketShare • 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 3 3
  • 4. Introduction SaaS 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 4 4
  • 5. Introduction Why 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) MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 5 5
  • 6. Introduction SaaS Causes Long-Term Change • Extends meaning of “Product” • Challenges industry business model • Delivers broader customer benefits • Changes competitive playing field MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 6 6
  • 7. Introduction Takeaways • 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 7 7
  • 8. Agenda • Introduction • Long-Term Changes • Impact Assessment • Potential Actions • Wrap-Up MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 8 8
  • 9. Long-Term Changes Extends Meaning of “Product” • Product • Product • Modules • Modules • Services • Services • Maintenance • Maintenance • Support • Support • Payment • Payment • Product structure • Payment structure • Infrastructure • SLA • Vendor risk MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 9 9
  • 10. Long-Term Changes Challenges Industry Business Model • Limited feature set • Packaging simplicity • Ordering flexibility • Uniform ongoing payments • Relationship driven • Feature laden products • More complexity • Standard terms • Hi upfront; low ongoing payments • Transaction driven MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 10 10
  • 11. Long-Term Changes Delivers Broader Customer Benefits Customer Benefit from SaaS SaaS Feature Price level Payment flexibility Billing term Payments aligned with benefits Less financial risk Small packaging increments More accountability IT and SW from one vendor Ease of administration Self-provisioning Easy to trial Lower implementation risk Customer service orientation Easy deployment Accessibility Faster time to value Simple to use, install Less operational disruption Incremental releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 11 11
  • 12. Long-Term Changes Alters Competitive Playing Field MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 12 12
  • 13. Long-Term Changes Alters Competitive Playing Field MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 13 13
  • 14. Long-Term Changes What to Do? • Who needs to respond? > Most vs. least affected • How to respond? > Greatest impact on prospects/customers • When to respond? > Timing, pace MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 14 14
  • 15. Agenda • Introduction • Long-Term Changes • Impact Assessment • Potential Actions • Wrap-Up MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 15 15
  • 16. Impact Assessment Existing 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 16 16
  • 17. Existing Vendors Evaluate Your Position MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 17 17
  • 18. Impact Assessment Evaluate 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 18 18
  • 19. Evaluate Your Options Which SaaS Benefits to Deliver? s k ng ch ard Ri Lo Mu H ra ll Customer Benefit from SaaS H ow How How Ove Payment flexibility F L Less financial risk F L E More accountability E L Ease of administration L E Lower implementation risk S H Easy deployment S H Faster time to value H H H Less operational disruption S H H H MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 19 19
  • 20. Agenda • Introduction • Long-Term Changes • Impact Assessment • Potential Actions • Wrap-Up MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 20 20
  • 21. Existing Vendors Evaluate Your Position MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 21 21
  • 22. Potential Actions Position Determines Action Vendor Position t Vendor ben Customer Benefit From SaaS c um Potential Actions (Examples) Risk In Lower entry prices Payment flexibility L Choice of payment plan Term-limited trial Less financial risk “Bite sized” products Single tenant hosting More accountability L Usage reports Flexible bill presentment Ease of administration Web-based license admin Lower implementation risk Premium support options Easy deployment Browser accessible Faster time to value H Simplify user interface Less operational disruption H Mandatory dot-releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 22 22
  • 23. Potential Actions Position Determines Action Vendor Position n t Vendor be n Customer Benefit From SaaS m ow Potential Actions (Examples) cu Risk In Kn Lower entry prices Payment flexibility L Choice of payment plan Term-limited trial Less financial risk “Bite sized” products Single tenant hosting More accountability L Usage reports Flexible bill presentment Ease of administration Web-based license admin Lower implementation risk Premium support options Easy deployment Browser accessible Faster time to value H Simplify user interface Less operational disruption H Mandatory dot-releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 23 23
  • 24. Potential Actions Position Determines Action Vendor Position n t Vendor be ed Customer Benefit From SaaS u m own and Potential Actions (Examples) c Risk In Kn Br Lower entry prices Payment flexibility L Choice of payment plan Term-limited trial Less financial risk “Bite sized” products Single tenant hosting More accountability L Usage reports Flexible bill presentment Ease of administration Web-based license admin Lower implementation risk Premium support options Easy deployment Browser accessible Faster time to value H Simplify user interface Less operational disruption H Mandatory dot-releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 24 24
  • 25. Potential Actions Position Determines Action Vendor Position n t e Vendor be ed bl n ta Customer Benefit From SaaS um now rand epu Potential Actions (Examples) Risk I nc K B R Lower entry prices Payment flexibility L Choice of payment plan Term-limited trial Less financial risk “Bite sized” products Single tenant hosting More accountability L Usage reports Flexible bill presentment Ease of administration Web-based license admin Lower implementation risk Premium support options Easy deployment Browser accessible Faster time to value H Simplify user interface Less operational disruption H Mandatory dot-releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 25 25
  • 26. Potential Actions Position Determines Action Areas Vendor Position n t e Vendor be ed bl n ta Customer Benefit From SaaS um now rand epu Potential Actions (Examples) Risk I nc K B R Lower entry prices Payment flexibility L Pricing & Choice of payment plan Less financial risk Packaging Term-limited trial “Bite sized” products Single tenant hosting More accountability L Licensing Usage reports & Ease of administration Billing Flexible bill presentment Web-based license admin Lower implementation risk Premium support options Easy deployment Browser accessible Product Faster time to value H Simplify Development user interface Less operational disruption H Mandatory dot-releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 26 26
  • 27. Agenda • Introduction • Long-Term Changes • Impact Assessment • Potential Actions • Wrap-Up MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 27 27
  • 28. Wrap-Up SaaS 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 28 28
  • 29. Wrap-Up Adapt 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 MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 29 29
  • 30. Wrap-Up Know Your Place MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 30 30
  • 31. Wrap-Up Focus on Specific SaaS Benefits Customer Benefit From SaaS SaaS Feature Price level Payment flexibility Billing term Payments aligned with benefits Less financial risk Small packaging increments More accountability IT and SW in one place Ease of administration Self-provisioning Easy to trial Lower implementation risk Customer service orientation Easy deployment Accessibility Faster time to value Simple to use, install Less operational disruption Incremental releases MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 31 31
  • 32. Wrap-Up Exploit Interim Tactics MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 32 32
  • 33. Rewriting the SaaS Laws No 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/ MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 33 33
  • 34. Wrap-Up Be Creative – Find a Way Just Do It Logo and phrase © Nike, Inc MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 34 34
  • 35. Thanks! Jim Geisman jimg@softwarepricing.com MarketShare, Inc. 508-647-0330 www.softwarepricing.com See also: http://www.softwarepricing.com/experts/SaaS-Practice-Details.cfm MARKETSHARE, inc. www.SoftwarePricing.com Stay ahead of the curve © 2007 MarketShare, Inc © 2007 MarketShare, Inc 35 35