0
Monetizing Multi-Tenancy:
 Exploiting the Revenue Potential in
Network Effect Data & SaaS Ecosystem
                 Prese...
Questionnaire
 Did you fill it out?




    http://sixteenventures.com   Copyright© 2010 Sixteen Ventures. All Rights Reser...
The goal for today...




                                                             Photo via caveman_92223

   http://...
Legacy Software Business
Structure

                                          Intellectual
                        Marketi...
Legacy Software



                       Customers              Developers




                                   Channel...
Software-as-a-Service (SaaS)



                        Customers              Developers




                            ...
Software-as-a-Service (SaaS)



                        Producers                 Consumers




                          ...
Software-as-a-Service (SaaS)



                        Producers               Consumers


                              ...
Software-as-a-Service (SaaS)



                        Producers               Consumers


                              ...
SaaS Business Architecture


                                                  Intellectual
                        Market...
Multi-Tenancy in SaaS - Technical Deep Dive




                   This page intentionally left blank




    http://sixte...
Multi-Tenancy in SaaS - Single Instance for all Customers


                Customer            Customer       Customer


...
Multi-Tenancy in SaaS - Its not just Customers!


               Customer           Partner    Developer



              ...
Multi-tenancy is good for...




                                                    Improved
                            ...
Leveraged properly, multi-tenancy turns
apples to apples comparisons...




                                  vs.



     ...
Into bowling ball to apple comparisons, in
your favor...




                                      vs.



                ...
Change the focus to things legacy vendors
cannot deliver!



                                           S
                ...
Multi-tenancy is ALSO good for...




                                 $$$
                                 $$$
          ...
SaaS Revenue Model




                     Intellectual                Products
  Marketing
                      Propert...
7 SaaS Revenue
Streams
                                    Products

                   Subscriptions                Ecosy...
Less Scalable Revenue
Streams
                                    Products

                    Subscriptions             ...
Scalable Revenue
Streams
                                    Products

                    Subscriptions               Eco...
Our Focus Today...
                                    Products

                    Subscriptions               Ecosystem...
Revenue Stream Scalability Index

             Symbol                           Definition

                               ...
Products                                                         Ecosystem
Subscriptions               Ecosystem


       ...
Products                                                        Network Effect
Subscriptions               Ecosystem

    ...
Gaining mainstream acceptance...




                                                                      Tweet via rwang...
SaaS Distribution - Myth




                                Web
    SaaS Vendor                          End Customer



...
SaaS Distribution - More Likely

                                                 You might not know
                     ...
SaaS Distribution - Example


         SaaS
       Company                    Intermediary     End-customer
              ...
SaaS Distribution - Value Chain view is limited
                                                     Industry
            ...
SaaS Distribution - Value Network Reality

       Trusted Advisors                                                        ...
SaaS Distribution - Value Network Reality

                                                Stand-alone
                 In...
Questionnaire


  SaaS Vendor




   http://sixteenventures.com   Copyright© 2010 Sixteen Ventures. All Rights Reserved
Question 2                              Application
                                        Customer




   http://sixteen...
Question 3                                                       Stand-alone
                                Intermediarie...
Question 4                                                       Stand-alone
                                Intermediarie...
Question 5                                                       Stand-alone
                                Intermediarie...
The sooner the better...


                   Who            What         When


                 Where             Why   ...
Did we reach the goal?




                                                             Apple Photo via kylemay

   http:/...
SaaS Revenue Modeling &
       Business Architecture


(972) 200-9317
lincoln@sixteenventures.com
http://sixteenventures.c...
Appendix A:
         Case Studies in SaaS Network Effect &
             Ecosystem Revenue Modeling




http://sixteenventu...
SaaS Case Studies

        SaaS Product                    Description of the SaaS offering

       End-Customer          ...
SaaS Case Study #1 - SCM/EDI Vendor
      SaaS Product                          Retail Supply Chain / EDI

     End-Custom...
SaaS Case Study #2 - Pharmaceutical Distributor

                        Vendor Managed Inventory Control System (internal...
SaaS Case Study #3 - Healthcare Revenue Cycle Mgmt
       SaaS Product                         Revenue Cycle Management

 ...
SaaS Case Study #4 - Restaurant Menu Management

      SaaS Product            Managed Care Menu Management (ancillary mar...
SaaS Case Study #5 - Mail Center Management

      SaaS Product              Mail Center Management & Package Tracking

  ...
SaaS Case Study #6 - Treasury Management

     SaaS Product                      Treasury & Cash Management

    End-Custo...
SaaS Case Study #7 - Bank Spend Management

      SaaS Product                           Bank Spend Management

     End-C...
Appendix B:
        Seven SaaS Revenue Streams Worksheet




http://sixteenventures.com            Copyright© 2010 Sixteen...
http://sixteenventures.com
                Seven Revenue
              Streams Worksheet

Consumers          Original     ...
SaaS Revenue Modeling &
       Business Architecture


(972) 200-9317
lincoln@sixteenventures.com
http://sixteenventures.c...
Upcoming SlideShare
Loading in...5
×

Monetizing Multi-Tenancy in SaaS by Sixteen Ventures. Presented at SaaS University in Dallas January 2010

3,590

Published on

Slides from the January 2010 SaaS University in Dallas, Texas presented by Lincoln Murphy of Sixteen Ventures. Monetizing Multi-Tenancy - Generating Revenue through Network Effect Data and the SaaS Ecosystem. Multi-tenancy is a key element of Software-as-a-Service (SaaS); but not for the reasons you think! Achieving economies of scale, streamlining software development, maintaining one line of source code, etc. are the widest-known benefits of multi-tenancy. The real magic happens when multi-tenancy is leveraged to unlock and enhance the Network Effect created by all customers using the same system. And when the Network Effect is itself leveraged by the Ecosystem, myriad opportunities present themselves to drive growth and revenue. These are what makes being a SaaS vendor so much better than being a Legacy Software vendor!

Published in: Technology, Business
2 Comments
3 Likes
Statistics
Notes
  • http://www.fioricetsupply.com is the place to resolve the price problem. Buy now and make a deal for you.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • One of the VERY BEST presentations on the real SaaS value which is the Ecosystem it allows to leverage, both from a vendor, a 'partner' and a customer perspective.
    ISVs willing to move to SaaS [or reluctant to do so], READ THIS and APPLY IT !
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total Views
3,590
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
187
Comments
2
Likes
3
Embeds 0
No embeds

No notes for slide

Transcript of "Monetizing Multi-Tenancy in SaaS by Sixteen Ventures. Presented at SaaS University in Dallas January 2010"

  1. 1. Monetizing Multi-Tenancy: Exploiting the Revenue Potential in Network Effect Data & SaaS Ecosystem Presented at SaaS University Dallas, Texas January 27, 2010 Copyright© 2010 Sixteen Ventures. All rights reserved.
  2. 2. Questionnaire Did you fill it out? http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  3. 3. The goal for today... Photo via caveman_92223 http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  4. 4. Legacy Software Business Structure Intellectual Marketing Property Revenue Technology Model Loosely-coupled, at best http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  5. 5. Legacy Software Customers Developers Channels Three basic elements http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  6. 6. Software-as-a-Service (SaaS) Customers Developers Channels Same elements http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  7. 7. Software-as-a-Service (SaaS) Producers Consumers Ecosystem Different approach http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  8. 8. Software-as-a-Service (SaaS) Producers Consumers Network Effect Ecosystem Very different approach http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  9. 9. Software-as-a-Service (SaaS) Producers Consumers Network Effect Key differentiators Ecosystem http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  10. 10. SaaS Business Architecture Intellectual Marketing Property Network Centricity Technology Revenue Model All aspects are tightly coupled http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  11. 11. Multi-Tenancy in SaaS - Technical Deep Dive This page intentionally left blank http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  12. 12. Multi-Tenancy in SaaS - Single Instance for all Customers Customer Customer Customer Customer Customer Customer Customer Customer Customer Network Effect! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  13. 13. Multi-Tenancy in SaaS - Its not just Customers! Customer Partner Developer Industry Customer Partner Customer Developer Customer Ecosystem! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  14. 14. Multi-tenancy is good for... Improved Easier Software customer Economies of Development support and Scale and product Management maangement http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  15. 15. Leveraged properly, multi-tenancy turns apples to apples comparisons... vs. SaaS vs. Legacy Software Photo via martinlabar http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  16. 16. Into bowling ball to apple comparisons, in your favor... vs. SaaS vs. Legacy Software Bowling Ball Photo via definetheline Apple Photo via martinlabar http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  17. 17. Change the focus to things legacy vendors cannot deliver! S M A S H SaaS vs. Legacy Software Bowling Ball Photo via definetheline Apple Photo via martinlabar http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  18. 18. Multi-tenancy is ALSO good for... $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ $$$ http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  19. 19. SaaS Revenue Model Intellectual Products Marketing Property Subscriptions Ecosystem Network Network Centricity Effect Services Advertising Revenue Technology Model Ancillary Revenue Model made up of Revenue Streams http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  20. 20. 7 SaaS Revenue Streams Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  21. 21. Less Scalable Revenue Streams Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  22. 22. Scalable Revenue Streams Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  23. 23. Our Focus Today... Products Subscriptions Ecosystem Network Effect Services Advertising Ancillary http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  24. 24. Revenue Stream Scalability Index Symbol Definition Scalable Revenue Stream Less-scalable Revenue Stream Not Scalable in most cases Scalability refers to margins per revenue stream; the more a revenue stream can benefit from economies of scale & improve margins with growth, the more “scalable” the revenue stream. Its not possible to eliminate all of the non-scalable streams (nor should you), but their value should be improved and the price charged should reflect that. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  25. 25. Products Ecosystem Subscriptions Ecosystem Network Effect Services Advertising Ancillary Pros Cons Unwanted 1-Infinity Scaling interdependencies can -Examples - grow if unchecked Platform Improved value for Lack of visibility into value Channels ecosystem partners chain for clients APIs White Label Need to market to end- Licensing Exposure to ancillary & users to create demand in adjacent markets front of channel partners http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  26. 26. Products Network Effect Subscriptions Ecosystem Network Effect Services Advertising Pros Cons Ancillary Fully leverages data collected in Privacy concerns require multi-tenant environment disclosure of intentions by vendor Requires planning up front an -Examples - An asset that increases execution early on data collection exponentially in value as usage of Anonymized/ the system grows linearly otherwise value is lost until Aggregate Data capture begins Reports Leverage ecosystem partners to Vendor must be diligent in develop reports or add value to adhering to regulations, Benchmarks data through APIs governance, and privacy laws APIs Careful planning to determine Does not require a “critical mass” when network effect data of users as many think for becomes valuable & to whom network effect data to be valuable required http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  27. 27. Gaining mainstream acceptance... Tweet via rwang0 http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  28. 28. SaaS Distribution - Myth Web SaaS Vendor End Customer The common fantasy is since its “on the web” the web is the distribution channel. Maybe, but you might want to explore that further; just to be sure. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  29. 29. SaaS Distribution - More Likely You might not know about them! SaaS Vendor Intermediary End Customer What if you don’t have to use an intermediary? Can you? Its called leverage, but the key is to remember that rarely will you compel 3rd parties with only revenue share agreements for SaaS. The vendor should dig deeper and find out what they can solve for them. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  30. 30. SaaS Distribution - Example SaaS Company Intermediary End-customer Consumer Manufacturers Packaged EDI Vendor Rep Goods Manufacturer SaaS vendor has a shared customer with the manufacturers rep. The SaaS vendor has figured out that the easiest way to reach the end-customer is through the Manufacturers rep. The SaaS vendor builds support for the Manufacturers Rep into the product giving them a reason to compel the shared end-customers to use the product. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  31. 31. SaaS Distribution - Value Chain view is limited Industry Association Intermediary Intermediary Intermediary Intermediary SaaS Vendor Intermediary Intermediary End Customer Intermediary Intermediary Intermediary Independent Developers http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  32. 32. SaaS Distribution - Value Network Reality Trusted Advisors Analyst Firms Traditional Channels Stand-alone Industry Associations Intermediaries Consumers SaaS Vendor Individuals Independent Developers Application Enterprises Other Software Vendors Platform Customer SaaS Vendor sits in the middle of everything! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  33. 33. SaaS Distribution - Value Network Reality Stand-alone Intermediaries Consumers SaaS Vendor Application Platform Customer The possibilities are endless! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  34. 34. Questionnaire SaaS Vendor http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  35. 35. Question 2 Application Customer http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  36. 36. Question 3 Stand-alone Intermediaries Platform Consumers http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  37. 37. Question 4 Stand-alone Intermediaries Platform Consumers http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  38. 38. Question 5 Stand-alone Intermediaries Platform Consumers http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  39. 39. The sooner the better... Who What When Where Why How Metrics Governance Privacy Commingled Segmented Anonymized Apple Photo via kylemay http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  40. 40. Did we reach the goal? Apple Photo via kylemay http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  41. 41. SaaS Revenue Modeling & Business Architecture (972) 200-9317 lincoln@sixteenventures.com http://sixteenventures.com @lincolnmurphy
  42. 42. Appendix A: Case Studies in SaaS Network Effect & Ecosystem Revenue Modeling http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  43. 43. SaaS Case Studies SaaS Product Description of the SaaS offering End-Customer Description of the SaaS vendor’s end-customer Who did the end-customer buy from, listen to, etc. that the End-Customer’s SaaS vendor could leverage, and help, in an effort to secure the Trusted Advisors end-customer relationship What benefits the clients derived from the network centricity Network Effect of the SaaS solution, including aggregate data How the Vendor derived value from, and added value to, its Ecosystem ecosystem, including VARs, SIs, Distributors, etc. Revenue Streams How the Vendor makes money http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  44. 44. SaaS Case Study #1 - SCM/EDI Vendor SaaS Product Retail Supply Chain / EDI End-Customer Small to Medium Consumer Packaged Goods manufacturer •Big Box Retailers End-Customer’s •Freight Brokers Trusted Advisors •Third-party Logistics Providers •Manufacturers reps Benchmarks on retail category performance available to all of Network Effect the end-customers’ Trusted Advisors Pre-built EDI maps, access to discounted & expedited shipping, Ecosystem visibility for intermediaries and interested parties Subscriptions (monthly & per-transaction), Ecosystem, Revenue Streams Network Effect Data, Services http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  45. 45. SaaS Case Study #2 - Pharmaceutical Distributor Vendor Managed Inventory Control System (internal product SaaS Product re-architected & exposed as SaaS) End-Customer Fragmented network of small independent pharmacies •Pharma Distributor that created the SaaS product End-Customer’s •Industry Association Trusted Advisors •Product Suppliers (whom the Distributor buys from; value- pull) Sophisticated inventory system allows distributor to aggregate Network Effect order history and current inventory for all pharmacies Use aggregate data to predict restocks, share that w/ vendor Ecosystem to get better terms for the pharmacy client Ancillary (float interest), Ecosystem (distributor commissions), Revenue Streams improved margins), Network Effect Data (suppliers pay), Services, Products (hardware device) http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  46. 46. SaaS Case Study #3 - Healthcare Revenue Cycle Mgmt SaaS Product Revenue Cycle Management End-Customer Fragmented network of small independent hospitals •Hospital Industry Associations End-Customer’s •Independent Consulting Firms Trusted Advisors •Complementary Software Vendors •Insurance companies and Government Payors Revenue & Collection Benchmarks against similar-sized Network Effect Hospitals (per-bed) Medicare, Medicaid, and Commercial Payer clearinghouse, Ecosystem Channel partners (visibility into their customers’ usage of system) Subscriptions (per-transaction, % collected), Ecosystem, Revenue Streams Network Effect Data, Services, Products http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  47. 47. SaaS Case Study #4 - Restaurant Menu Management SaaS Product Managed Care Menu Management (ancillary market) End-Customer Small Assisted Living Facilities End-Customer’s •Food Distributors Trusted Advisors •Industry Association •Assisted Living Management Companies Aggregate menu item usage data to help negotiate better deals Network Effect for end-clients (through channel partners where applicable) Directly monetized relationship with Food Distributor Ecosystem (channel) to salvage unprofitable existing relationship w/o getting in front of partner or negatively affecting end-client Subscriptions (Annual per-location), Ecosystem (Distributor Revenue Streams visibility), Network Effect Data, Services, Products http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  48. 48. SaaS Case Study #5 - Mail Center Management SaaS Product Mail Center Management & Package Tracking End-Customer Large Corporate & Fortune 500 mailrooms •Mailing Industry Associations End-Customer’s •Shipping Carrier Auditors Trusted Advisors •Industry Consultants •Complementary Software and Hardware Vendors Most Mail Center managers are in a position to justify their existence so benchmarks against other Mail Centers helped Network Effect prove operational efficiency, Complementary vendors and industry associations found data useful, too shipment tracking, spend management & procurement, carrier Ecosystem audits Subscriptions (per-transaction), Ancillary (carrier audits), Revenue Streams Ecosystem, Network Effect http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  49. 49. SaaS Case Study #6 - Treasury Management SaaS Product Treasury & Cash Management End-Customer Large Corporate & Fortune 500 mailrooms •Industry Associations End-Customer’s •Anti-Money Laundering Groups Trusted Advisors •Banks •Consultants Aggregation of transactional details across industries, locales, Network Effect etc. Benchmarks on interest, float, sweeps, etc. against similar industries Anonymous Aggregated (A/A) data used by Anti-Money Laundering groups to “teach” their software patterns, Banks Ecosystem and Consultants leverage A/A of their clients & others in the system to judge performance and offer guidance, upsell, etc. Subscriptions (per user, per-transaction), Ancillary (float, Revenue Streams brokerage/forex commissions), Ecosystem, Network Effect Data http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  50. 50. SaaS Case Study #7 - Bank Spend Management SaaS Product Bank Spend Management End-Customer Local and Regional Banks & Credit Unions •Industry associations End-Customer’s •Local & Regional Printing Companies Trusted Advisors •Complementary Software Vendors •Office Supply vendors Aggregate orders across bank branches allows vendors to aggregate order history and current inventory for customers, Network Effect customers get group purchasing power through aggregation under one SaaS vendor in addition to core product value Office Supply vendors gain visibility into the buying behavior of specific target market, complementary software vendors gain Ecosystem visiblity into transaction history of customers for inclusion in their product Subscriptions (per branch, vendor visibility), Ancillary, Revenue Streams Ecosystem (vendor commissions, API), Network Effect http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  51. 51. Appendix B: Seven SaaS Revenue Streams Worksheet http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  52. 52. http://sixteenventures.com Seven Revenue Streams Worksheet Consumers Original Other Stand-Alone Producers Producers Consumers Subscriptions Ecosystem Network Effect Ancillary Products Services Advertising Copyright© 2010 Sixteen Ventures. All Rights Reserved
  53. 53. SaaS Revenue Modeling & Business Architecture (972) 200-9317 lincoln@sixteenventures.com http://sixteenventures.com @lincolnmurphy
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×