SaaS: Why Does it Matter? And How Do I Get There? - cleverbridge Networking Event (CNE)

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Doug Caviness, head of SaaS solutions, cleverbridge; Alisher Ishanov, partnership manager, FlippingBook; Jim Kinlan, CEO, TemplateZone; and Stefan Utzinger, CEO, Novastor, discuss opportunities in the SaaS e-commerce market.

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  • SaaS subscription revenue is currently $12.3 Billion/ year, growing to $22.1 Billion/ year by 2015.
  • Summary of major acquisitions of SaaS companies over the last 6 months +/-. Oracle’s acquisition of ?, etc.
  • 2012. Hosted version requires that you call Sage to purchase it.
  • At $2.3 billion in revenue, Salesforce.com has a 56.2% share of SaaS CRM market. SaaS CRM represents 14.8% of CRM market.
  • Google Drive, Dropbox, Microsoft SkyDrive, iCloud
  • Microsoft launches MS Office 365 in June 28, 2011.
  • 2012. Download product combined with online backup, mobile access and 24/7 phone support. April 2012 Intuit acquired DemandForce (SaaS provider of consumer demand for SMB – social campaigns, reputation management). April 27 Announcement. Autodesk announcement date on Autodesk 360 March 27, 2012.
  •  Validation of SaaS as a hot market. – Content will be compressed onto one slide either as facts or as Headlines of Press Announcements, etc.Sources: http://www.eweek.com/c/a/Cloud-Computing/SaaS-Revenue-to-Reach-145-Billion-in-2012-Gartner-567722/
  • Source: “The SaaS Market Hits Mainstream: Adoption Highlights 2011”, Forrester ResearchFigure 1
  • Source: “The SaaS Market Hits Mainstream: Adoption Highlights 2011”, Forrester ResearchFigure 2
  • Source: “The SaaS Market Hits Mainstream: Adoption Highlights 2011”, Forrester ResearchFigure 3
  • Source: “Which Software Markets Will SaaS Disrupt?”, Forrester Research, Jan 12, 2011Figure 1
  • Source: “Which Software Markets Will SaaS Disrupt?”, Forrester Research, Jan 12, 2011Figure 3
  • Source: “Which Software Markets Will SaaS Disrupt?”, Forrester Research, Jan 12, 2011Figure 6
  • Source: “Which Software Markets Will SaaS Disrupt?”, Forrester Research, Jan 12, 2011Figure 7
  • Source: “Which Software Markets Will SaaS Disrupt?”, Forrester Research, Jan 12, 2011Figure 8
  • SaaS: Why Does it Matter? And How Do I Get There? - cleverbridge Networking Event (CNE)

    1. 1. SaaS – Why Does it Matter? And How Do I Get There? A panel discussion
    2. 2. Definition of SaaS – Software as a ServiceGartner definition: • Software that’s owned, delivered and managed remotely by one or more providersDelivery model: • 12+ years old • Previously called “application services provider”Pure SaaS model: • Single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers anytime, on a pay-for-use basis or as a subscription based on use metrics. • Does not mean that use of the product is not customizableExamples: • Salesforce.com, LinkedIn, Dropbox
    3. 3. SaaS Disrupts – How Does it Affect You?• SaaS share of global software vendor revenues: • 2013: $81 billion (17% of $476 billion) • 2010: $25 billion (7% of $354 billion) 373% growth• SaaS will be disruptive in products that comprise about 25% of the worldwide software market (CRM, HR Mgt, IT Mgt, Security).• Examples of projected market share (2013): • >90%: blogs, wikis, web conferencing, talent mgt, compensation mgt • 50% to 90%: electronic invoice presentment and payment, expense reporting • 26% to 50%: sales force automation, HR mgt, customer service and support• But SaaS is unlikely to replace all categories. For some, SaaS might just complement traditional software.(Source: “Which Software Markets Will SaaS Disrupt?”, Forrester Research)
    4. 4. Recent SaaS Acquisitions (sample)Company Acquisition & Date AmountIntuit Demandforce (04/12) $424 MillionFacebook Instagram (04/12) $1 BillionDell Wyse Technology (04/12) UndisclosedSAP SuccessFactors (02/12) $3.4 BillionOracle Taleo (02/12) $1.9 BillionLinkedIn Rapportive (02/12) $15 MillionSalesforce Desk (02/12) $50 Million
    5. 5. Recent SaaS Funding (sample)Company Funding Amount & Date ValuationEvernote $70 Million (05/12) $1 BillionSugarSync $15 Million (02/12) UnavailableSendGrid $21.6 Million (01/12) UnavailableZinio $20 Million (11/11) UnavailableDropbox $250 Million (10/11) $5 BillionBox $81 Million (10/11) $600 MillionSpotify $100 Million (06/11) $1.1 Billion
    6. 6. 2012
    7. 7. 2012
    8. 8. 2012Freemium model Announced April 24, 2012
    9. 9. Announced April 24, 2012
    10. 10. 2012
    11. 11. 2012
    12. 12. 2012
    13. 13. What’s Driving SaaS – Customer’s Perspective • Total cost of ownership (TCO) • Low startup / low fixed costs • Faster – delivery of features and functions from SaaS vendors – time-to-market from ease of implementation And other factors like: • Increasing trust in the Cloud • Connectivity for mobile and other devices • Consumerization of IT
    14. 14. What’s Driving SaaS – Vendor’s Perspective • Recurring revenue • Disrupt industry incumbents • Lower cost of service delivery or customer acquisition allows addressing new markets (SMB, etc.) • Complement traditional software • Consumerization of IT (bypass centralized selling) • Growth in connected devices • Funding and valuations (5x Rev vs. 2.5x Rev)
    15. 15. SaaS Changes How You Run Your BusinessBilling Customer Relationship• Frequency and complexity • Sales and marketing automation• Average Order Value (AOV) • Analytics• Annual value • Customer lifecycle managementMetrics Product Development & Revenues• Lifetime Customer Value (LCV) • Agile development• Churn Rate (Retention) • Open architecture• Upgrade/Up-sell/Downgrade Rates • Smoothing of revenues Consider the implications of Freemium or other subscription models
    16. 16. How Do I Evolve to SaaS? Examples: • Pure SaaS offering (Salesforce.com) • Sell download as a subscription (Antivirus, etc.) • Perpetual license + SaaS (QuickBooks Pro Plus, Autodesk 360) • Hybrid (Dropbox, Adobe Creative Cloud) • Partnering / white-label
    17. 17. cleverbridge & SaaS • Growing roster of SaaS clients • 30% of transactions are already subscriptions • Most business models supported, including: • Freemium • Upgrades, downgrades, proration • Multi-line subscriptions • Usage-based billing • Microtransactions • Merchant of Record (you or cleverbridge)
    18. 18. Panel DiscussionAlisher Ishanov, PartnershipManager, FlippingBookJim Kinlan, CEOTemplateZoneStefan Utzinger, CEONovastor
    19. 19. In the Old Days, whenMen were Men we sold it in a box or a big downloadable file and charged a one time fee
    20. 20. Thank you
    21. 21. END OF DECK
    22. 22. Why companies select SaaS vs. traditional
    23. 23. What’s preventing more SaaS penetration?
    24. 24. SaaS Models vs. Traditional Traditional: • 1,000 orders buy again when new product released • Quickbooks example $199 per year Subscription: • 1,000 monthly subscriptions equals 12,000 yearly invoices • Quickbooks example $24.95 per month, $299 per year Billing (usage): • 1,000 monthly subscriptions, all different amounts
    25. 25. SaaS Models vs. Traditional Traditional – download and boxed product • Free trial (30 day limit) • One-time transaction • Success or failure tied to product release and sales cycle • Limited knowledge of consumer’s use of product • Typically limited direct contact or communication with user SaaS • Freemium or trial (objective is tied to user engagement) • Subscription or other recurring billing that is tied to use • Agile development and smoothing out of revenue stream • Hone analytics (understand and drive use / consumption and upsell) • Sales and marketing automation. • Customer lifecycle management • Network effect and “Winner take all”

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