Microsoft PowerPoint - OpSource SLAM Presentation 8-16-05
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  • 1. Unique Challenges of SaaS Delivery: For Start-Ups, SaaS Companies, and Established ISVs Treb Ryan, CEO, OpSource August 17, 2005
  • 2. Why Software as a Service (SaaS)? • Customers are demanding this model – Cost effective alternative to traditional deployment – Increased flexibility to meet dynamic technology needs – Enhanced application performance, availability, support – Reduced burden on internal IT staff • SaaS benefits software vendors, too – Intense competition makes SaaS a strategic imperative and differentiator – Allows Sales Directly to End User – Broadened sales opportunities – Predictable streams of recurring revenue – Strengthened relationships with customers According to Gartner, “By 2008, more than 50 percent of the software purchased will be via service…” Source: “Software as a Service Will Be Business Model of Choice by 2008,” By Joanne Correia, Roger Fulton and Fabrizio Biscotti, 19 October 2004.
  • 3. SaaS Adoption Source: IDC Software as a Service Adoption Study, 2005
  • 4. Challenges of SaaS Delivery • Business model – Pricing, margins – Billing – SLAs • Code – Multi-tenancy – Software requirements/cost model • Operations – Scalable infrastructure – Capabilities in 24x7 systems management, call centers, hosting/networking, security, disaster recovery, etc.
  • 5. Business Model Considerations for ISVs • Target Customers – Moving down market – Grabbing market share from established players – Align SW costs with business stage & needs • Pricing – First must determine units – Second must determine price per unit • Billing – Monthly, yearly, up-front • Service Level Agreements • Sales models and compensation • Revenue recognition
  • 6. Three Kinds of ISVs Start-ups that Companies that Established have not yet are already software vendors launched a SaaS delivering SaaS - transitioning to offering exclusively SaaS for one or more products
  • 7. Unique Challenges for Established ISVs • Rethinking business models – Pricing, revenue recognition, sales compensation, and more • Transforming code – Single instance vs. multi instance vs. multi tenant • Becoming proficient in an entirely new set of operational disciplines – Hosting and networking, security, disaster recovery, etc. • Marketing to a new group of customers • Creating a compelling price point for the solution • Addressing presales questions about security, disaster recovery, etc.
  • 8. Case Study: Established ISV • KANA Software - provides Service Resolution Management (SRM) solutions to enhance customer service • Faced increasing customer demand for on- demand e-mail response management • Partnering resulted in initial cost reductions of 70%, ongoing cost savings of 30%
  • 9. Unique Challenges for Start-Ups • Bringing products to market cost-effectively • Building a baseline infrastructure that can scale • Ensuring that they have adequate resources to support the application – Hosting, networking, security, business continuity, etc. • Effective marketing strategies to grow customer base • Creating a pricing strategy to drive ROI • Appearing “bigger than they are”
  • 10. Case Study: Start-Up • Bankers Code – providing financial services application to U.S mortgage lending industry • Delivering SaaS will help company differentiate itself and gain market share • Through partnering, company with limited resources has immediate access to a world- class infrastructure and technical expertise, reducing time to market significantly
  • 11. The SaaS Ecosystem: Partnering for Success • Service delivery not part of software company DNA • Realize what is Core and What is Context – Great Software is still the Core – Everything else is context • Growing ecosystem of “SaaS enablers” to help ISVs overcome challenges • Partnering allows ISVs to accelerate time to market, reduce costs and risk, remain focused on core competency
  • 12. What to Look For in a Partner • Experience is very important • A true SaaS Partner should offer: – Platform designed to enable SaaS – Unit-based pricing – Enablement program designed to accelerate time to market and optimize offering • Beware of “Warmed Over” Options – Many will be jumping in to this space
  • 13. Summary • SaaS presents many advantages to both customers and vendors • The challenges of bringing SaaS to market and delivering it on an ongoing basis are significant • All three types of ISVs—start-ups, vendors exclusively delivering SaaS, and established software companies—can benefit from partnering