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.
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: “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)
SaaS – Why Does it Matter? And How Do I Get There? A panel discussion
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
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)
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
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)
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
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
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)
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
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”