Software as a Service:  The Business Model

Software as a Service: The Business Model Kyle Cordes St. Louis Innovation Camp 2010

About Kyle Cordes • Blah, Blah, Blah. • You know where to ﬁnd me.

SaaS Experience • Mobile Workforce Management LLC • Vertical Market: Utility Locating Industry • SaaS ﬁrm I co-founded in 2004 • Sold in 2009 • Lessons from that experience, in this talk

Start with an Idea http://www.ﬂickr.com/photos/cayusa/

Fire up your IDE (from the Eclipse web site)

This is Power http://www.ﬂickr.com/photos/vattenfall/

Software Business Deliver More than Software

1) Delivery of the Bits http://www.ﬂickr.com/photos/giorgos-androulidakis/

2) License to Use http://www.ﬂickr.com/photos/nobmouse/

3) Hosting Perhaps with tidier racks than I have pictured here. http://www.ﬂickr.com/photos/mpancha/

4) Operations http://www.ﬂickr.com/photos/jemimus/

5) Support http://www.whatheck.com/uploaded_images/headset-hottie-759827-759993.jpg I present this stereotype as a commentary on advertising.

Model: Consulting • Sell Labor, by the Hour or Project • Provide the 5 pieces in whatever way a customer asks for them

Model: License Sale • Sell #1 (Delivery) and #2 (License) up front • Sell a service contract for support

Model: SaaS • Bundle the whole thing, #1 #2 #3 #4 #5 • Sell it per-something / per-time: • Per user • Per hour • Per transaction • Percent of transaction amount

Recurring Revenues http://www.northwestmuseum.org/

Sporadic vs Recurring

Customer Like SaaS • Little Money Up Front: Less Risk • No hosting effort, pain, management • Easy Scaling Up • Easy Scaling Down http://www.ﬂickr.com/photos/geoff_mv/

Except When They Don’t • Less Control • Less Leverage • Less Customization • No Unique Asset http://www.ﬂickr.com/photos/realestateclientreferrals/

Customizations • “No” • Per-Hour: can of worms • Expedite Fee • Increase Per-Unit / User / Month Charge http://www.ﬂickr.com/photos/benmcleod/

Sounds great, how do I get started?

Starting a SaaS Business Here is a • Pick a market bootstrap • Have some money on approach. hand There are • Write v 1.0 other ways, • Sell customers 1..n of course. • Reach Break Even •

SaaS Business Model 1) Write Software 2) Sell it per-something 3) Proﬁt http://www.ﬂickr.com/photos/bullionvault/

kylecordes.com http://www.ﬂickr.com/photos/thetruthabout/

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Software as a Service:  The Business Model

by Kyle Cordes on Feb 28, 2010

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