Building a Scalable and Profitable SaaS Business Model

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SaaS and Cloud has completely transformed the way products are built and delivered to users. While there are several technical strategies to deliver a product in a SaaS model, can they sustain as you grow? From an ISV perspective the following questions are very critical,
• Is this model scalable and can I add more customers?
• How do I keep my operational expenses low?
• How can I deliver superior quality of service at a lower cost?

Published in: Technology, Business

Building a Scalable and Profitable SaaS Business Model

  1. 1. Building a Scalable and Profitable SaaS Business Model 13-Nov-2013 www.techcello.com
  2. 2. Housekeeping Instructions  All phones are set to mute. If you have any questions, please type them in the Chat window located beside the presentation panel.  We have already received several questions from the registrants, which will be answered by the speakers during the Q & A session.  We will continue to collect more questions during the session as we receive and will try to answer them during today’s session.  In case if you do not receive answers to your question today, you will certainly receive answers via email shortly.  Thanks for your participation and enjoy the session! Cloud Ready Development Framework For SaaS and Enterprise Software
  3. 3. Summary Agenda SaaS Business Model Blind spots in SaaS SaaS Life Cycle Business Management Challenges Solutions Customer Service Challenges Solutions Product Engineering Challenges Solutions About Cello Benefits Questions Cloud Ready Development Framework For SaaS and Enterprise Software
  4. 4. Speaker Profiles  14+ years of experience in architecting cloud and SaaS solutions for both ISVs and Enterprises  Chief architect in designing and constructing CelloSaaS framework Jothi Rengarajan Chief Technical Architect  Plays consultative role with customers in implementing SaaS solutions  An ardent cloud enthusiast and a prolific speaker at NASSCOM & Cloud Connect Events  15+ years of software development experience, he is instrumental in defining CelloSaaS framework Janaki Jayachandran  Enables Enterprises and ISVs to define their cloud strategy Director of Technology Cloud Ready Development Framework For SaaS and Enterprise Software
  5. 5. SaaS Business Model • Expect more customers • Retaining customers is more important than getting new customers • Expect churn, as customers can now easily switch vendors • Trickling revenues over a period of time • Attractive and flexible pricing model to meet SMB budget • Keep enriching features to increase upsell Scale Revenue • Responsible for both Hardware and Software • Security and Availability is key • Should scale to meet increasing customer base • Responsible to meet the SLAs • Should expect more tickets as customer base grows • Recurring payment collection Infrastructure Operations Cloud Ready Development Framework For SaaS and Enterprise Software Your SaaS Solution How “Complete” is Your SaaS Solution?
  6. 6. Blind Spots in SaaS Hurray!!! I am on SaaS now!!! Idea (or) Existing Product Technical Feasibility/PoC Architecture Develop/Migrate Testing Deployment Solution ISVs typically overlook two other important areas Blind Spot Blind Spot Selling Servicing Can you be profitable? Cloud Ready Development Framework For SaaS and Enterprise Software
  7. 7. SaaS – Number Game Budget Split-up Administration 15% Number of Avg. Revenue Customers Monthly per Customer * Total Revenue Cost of Delivery (CoD) (30%) Customer Service (A) Cost of Delivery includes Hardware cost, License cost, Tech Support and Account Management $ 20,000 $ 6,000 2 $ 2,000 11 $ 22,000 $ 6,600 3 $ 2,000 12.1 $ 24,200 $ 7,260 $ 2,000 13.3 $ 26,600 $ 7,980 5 $ 2,000 14.6 $ 29,200 $ 8,760 6 $ 2,000 16.1 $ 32,200 $ 9,660 $ 2,000 17.7 $ 35,400 $ 10,620 $ 2,000 19.5 $ 39,000 $ 11,700 9 Customer Service 30% 10 4 Sales & Marketing 30% 2,000 8 Profit 10% $ 7 R&D 15% 1 $ 2,000 21.5 $ 43,000 $ 12,900 10 $ 2,000 23.7 $ 47,400 $ 14,220 11 $ 2,000 26.1 $ 52,200 $ 15,660 12 $ 2,000 28.7 *10% Month on Month Growth $ 57,400 $ 17,220 Cloud Ready Development Framework For SaaS and Enterprise Software
  8. 8. SaaS Life Cycle Cloud Ready Development Framework For SaaS and Enterprise Software
  9. 9. SaaS Life Cycle Management Solution - Needs Management Team Needs error free , efficient and innovative mechanism to strategize, manage and monetize subscriptions. Customer Service Team Needs a quick and cost effective way to roll-out customers and process their requests. Monitor the product performance and take proactive measures. Cloud Ready Development Framework For SaaS and Enterprise Software Product Engineering Team Build high speed, scalable and secure system.
  10. 10. Cello – One Stop Solution Cello has packaged these common requirements as a suite of services, which can be easily integrated to your product. Cloud Ready Development Framework For SaaS and Enterprise Software
  11. 11. Cello – Solution Areas Cloud Ready Development Framework For SaaS and Enterprise Software
  12. 12. Business Management - Challenges How can I shorten my sales cycle? Can I provide a customer friendly subscription model? How can I increase my trial conversion rate? How can I increase my upsell? How can I reduce my churn? How can I cost effectively manage and monetize subscriptions? How do I manage my Reseller? Cloud Ready Development Framework For SaaS and Enterprise Software
  13. 13. Business Management - Solutions Offer Self Subscriptions and Trials Track Customer Behavior and Usage Module wise access Real-time tracking of “pay as you go” usage Innovative pay by use model Automated Invoice Generation Innovative pricing model Automate Payment Collection Analyze and act on hot/cold trials Self Service Portal Live Revenue Tracking Reseller Portal Cloud Ready Development Framework For SaaS and Enterprise Software
  14. 14. Business Management - Solutions SaaS Solution Tenant A Tenant B Tenant C Reseller A Tenant D Module: X Y Z Module: X Y Z Module: A B X Module: C (usage restriction) Flat Cost: $100 Flat Cost: $25 Flat Cost: $125 Module: A B C X Y Z Usage Cost: $1 per transaction Trial for 30 Days Payment: Pre paid Cloud Ready Development Framework For SaaS and Enterprise Software Commission: 20% Flat Cost: $125 Payment: Post paid
  15. 15. Business Management - Solutions Examples of Value Pricing Models SaaS Product Pricing Model Trading System Number of traders in the system. Supply Chain Management x% of the total value of transactions. Workforce Management Number of workers managed in the system. System DMS Total volume of documents maintained. Recruitment System Number of candidates hired through the system Health Care System Number of patients managed through the system CMS Number of content shared with other users Cloud Ready Development Framework For SaaS and Enterprise Software
  16. 16. Business Management – Cello Features • Product Editions • Multiple Price Plans • Fixed/Usage Cost • Trial and Evaluations • Upgrade/Downgrade • Activation/Deactivation • Tenant Provisioning • Self Registration • Customer Analytics • Customer portal • Role based access control • Support for Reseller Model Subscription Customer Management • Metering Usage • Invoice Generation • Proration • Applying Tax/Discount rates • Generic Adjustments • Invoice Dashboard • Credit card Support • Pay Pal Support • Payment Automation • Retry Policy • Revenue Tracking Invoice Payments Cloud Ready Development Framework For SaaS and Enterprise Software
  17. 17. Business Management – Cello Screen Shots Customer Analytics Cloud Ready Development Framework For SaaS and Enterprise Software
  18. 18. Business Management – Cello Screen Shots Billing Dashboard Cloud Ready Development Framework For SaaS and Enterprise Software
  19. 19. Business Management – Cello Screen Shots Customer Portal Cloud Ready Development Framework For SaaS and Enterprise Software
  20. 20. Business Management – Cello Screen Shots Cloud Ready Development Framework For SaaS and Enterprise Software
  21. 21. Customer Service - Challenges According to Forum Corporation Research, “Almost 70% of the identifiable reasons why customers left typical companies had nothing to do with the product. The prevailing reason for switching was poor quality of service.” According to a study by the Rockefeller Foundation, Cloud Ready Development Framework For SaaS and Enterprise Software
  22. 22. Customer Service - Challenges How quickly can I finish customer implementation? How can I eliminate “shelfware”? How can I provide my customer the ability to self service their needs? How can I proactively support my customers better and increase customer satisfaction? How can I proactively communicate with my customer at different stages? How can I reduce the involvement of engineering team to service customer request? How can I service more customers with less support bandwidth? Cloud Ready Development Framework For SaaS and Enterprise Software
  23. 23. Customer Service - Solutions Automate customer implementation and enable self service Aim for sign-in and immediate use of the system Adopt configuration vs. customization. Embed configurability in the respective areas within the product Automate customer communication process Track customer behavior Track customer experience with the system Track product performance Cloud Ready Development Framework For SaaS and Enterprise Software
  24. 24. Customer Service - Solutions Typical Implementation Flow Provision Tenant Set up Data Isolation Setup Users Set Up ACL Set up Recurring Reports Set up Business Process Workflows Set up Business Process Screens Set up Look and Feel Import Tenant Data Set up Integration Cloud Ready Development Framework For SaaS and Enterprise Software
  25. 25. Customer Service - Solutions Typical Task List Of Customer Service Team Send XYZ Report To Customer A Send XML Data Export to Customer B Take Data Backup of Customer C Send Security Audit Information for Customer C Send Subscription Reminder Email to the customers Get the report of Customers who are not actively using the system and talk to them Check the current performance health of the system Cloud Ready Development Framework For SaaS and Enterprise Software
  26. 26. Customer Service – Cello Features • Auto Tenant Provisioning • Tenant Settings Management • White Labeling • Single Sign On • Business process Workflow customization • Business Event Audit Streams • Event Driven Integration Implementation Configuration • Product Analytics • Customer Analytics • Query Builder • Chart Builder • Report Builder • Data Partition Management • Data back-up Report Data Management Cloud Ready Development Framework For SaaS and Enterprise Software
  27. 27. Customer Service – Cello Screen Shots Business Process Workflow Cloud Ready Development Framework For SaaS and Enterprise Software
  28. 28. Customer Service – Cello Screen Shots Configurable Notifications Cloud Ready Development Framework For SaaS and Enterprise Software
  29. 29. Customer Service – Cello Screen Shots Product Analytics Cloud Ready Development Framework For SaaS and Enterprise Software
  30. 30. Customer Service – Cello Screen Shots Product Analytics Cloud Ready Development Framework For SaaS and Enterprise Software
  31. 31. Customer Service – Cello Screen Shots Tenant Management Dashboard Cloud Ready Development Framework For SaaS and Enterprise Software
  32. 32. Product Engineering - Concerns My Sales is doing great – oops! my product is not scaling Machine cost is continuously going high Hackers - why cant they leave me alone? Two customers data in the same box!!! God! One more system to integrate? Are they kidding? They need 4 more fields and new workflow??? My product road map is always blocked! Hmm.. Customer insists on on-premise deployment! Cloud Ready Development Framework For SaaS and Enterprise Software
  33. 33. Product Engineering - Solutions Scale-out at all layers Adopt web hooks Adopt Data-Shards Build configurable data views Adopt Multi tenancy Build Configurable Workflows Adopt OWASP Build Configurable Reports Automate ACL and Data Isolation checks Have a proper error logging mechanism Adopt SOA Build your product modular Cloud Ready Development Framework For SaaS and Enterprise Software
  34. 34. Product Engineering – Scalable Solution Load Balanced App Servers User Load Multi-Tenant Database Cloud Ready Development Framework For SaaS and Enterprise Software
  35. 35. Product Engineering – Scalable Solution Load Balanced App Servers User Load Multi-Tenant Database Cloud Ready Development Framework For SaaS and Enterprise Software Dedicated DB
  36. 36. Product Engineering – Scalable Solution Load Balanced App Servers User Load Module A Tenant 1 to x Tenant x+1 to y Tenant y+1 to z Dedicated DB Tenant 1 to x Tenant x+1 to y Tenant y+1 to z Dedicated DB Module B Cloud Ready Development Framework For SaaS and Enterprise Software
  37. 37. Product Engineering – Cello Features Your SaaS solution E n g i n e e r i n g S t a c k Security Modules User Management Role/Privilege Mgmt. Single Sign-on Dynamic Data Scope Auditing Configurability Modules Custom Fields Custom LoV Settings Template Themes & Logo Pre & Post Processors Enterprise Engines Business Rules Workflow Integration Modules Dynamic Forms Events Ad-hoc Builders Query Chart Notification Templates Productivity Utilities Reports Code Templates Master Data Mgmt. Application Multi-Tenancy & Tenant Data Isolation Cloud Ready Development Framework For SaaS and Enterprise Software Forms Generation E n g i n e e r i n g S t a c k
  38. 38. Product Engineering – Cello Screen Shots Granular Level of Access Control Cloud Ready Development Framework For SaaS and Enterprise Software
  39. 39. Product Engineering – Cello Screen Shots Data Partition Management Cloud Ready Development Framework For SaaS and Enterprise Software
  40. 40. Product Engineering – Cello Screen Shots Events and Web Hooks Cloud Ready Development Framework For SaaS and Enterprise Software
  41. 41. About Cello – Plug & Play Integration Cloud Ready Development Framework For SaaS and Enterprise Software
  42. 42. Cello Benefits SaaS Life Cycle Management Solution SaaS Solution Scalable and Profitable SaaS Business Cloud Ready Development Framework For SaaS and Enterprise Software
  43. 43. Cello - Awards & Accolades Cloud Ready Development Framework For SaaS and Enterprise Software
  44. 44. Summary SaaS – Critical to get more customers Do not ignore “Selling” and “Servicing” related needs Monetization tools required for more “selling” Customer Service capabilities for efficient operations Product engineering features for a scalable and secure product SaaS Life Cycle Management Solution – way to go Cloud Ready Development Framework For SaaS and Enterprise Software
  45. 45. Contact Us Web : http://www.techcello.com General Enquiry : info@techcello.com Support Enquiry : support@techcello.com Sales Queries: sales@techcello.com Cloud Ready Development Framework For SaaS and Enterprise Software

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