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SaaS Cannibalization And Civil War Within

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Small and nibble SaaS disruptors in the space, who were built from the ground up to host these powerful solutions, are in a much better position to advance their position in the market and bleed customers away from the software behemoths. The speaker saw this David versus Goliath dynamic play itself first hand in his previous post at Siebel. In direct response to Sales-force.com's pioneering SaaS model, Siebel launched is own on-demand business unit, which touched off an internal civil war when Siebel CRM OnDemand began cannibalizing its core on-premise solutions. Learn how large vendors are cannibalizing their core business units by moving to the on-demand model.

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SaaS Cannibalization And Civil War Within

  1. 1. Software as a Service — The Threat From Within How Cannibalization is Creating a Civil War within Large Enterprise Software Vendors Ken Rudin CEO, LucidEra
  2. 2. My Perspective <ul><li>Salesforce.com </li></ul><ul><li>NetSuite </li></ul><ul><li>Siebel </li></ul><ul><ul><li>Siebel Enterprise </li></ul></ul><ul><ul><li>Siebel CRM OnDemand </li></ul></ul>
  3. 3. What Do I Mean By Cannibalization? <ul><li>“A reduction in the sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.” </li></ul>Copyright © 2007 LucidEra – All rights reserved
  4. 4. SaaS: The Opportunity <ul><li>Access to new markets (midmarket) </li></ul><ul><li>Recurring revenue stream </li></ul><ul><li>Respond to competitive threats </li></ul><ul><li>Creates up-sell opportunities </li></ul><ul><ul><li>The “on ramp” </li></ul></ul>Copyright © 2007 LucidEra – All rights reserved
  5. 5. SaaS: The Threat <ul><li>Fear of cannibalization creates a Civil War between the SaaS team and the rest of the company </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Engineering </li></ul></ul>Copyright © 2007 LucidEra – All rights reserved
  6. 6. 5 Signs Your Company is Fighting a Civil War <ul><li>You’re called in after an enterprise deal is lost </li></ul><ul><li>During account planning, you’re having discussions about pros/cons of selling a customer your on-premise vs on-demand solution </li></ul><ul><li>Corporate marketing won’t approve your collateral </li></ul><ul><li>Finance mandates that when speaking to the press, you must say that your SaaS revenue is “not yet material” </li></ul><ul><li>People are leaving to go to pure-play SaaS vendors </li></ul>Copyright © 2007 LucidEra – All rights reserved
  7. 7. Additional Issues <ul><li>Channel Friction </li></ul><ul><li>A Product Feature Set versus a Service Mindset </li></ul>
  8. 8. What to do? <ul><li>If you want to move down to midmarket </li></ul><ul><ul><li>Treat SaaS team as a separate company </li></ul></ul><ul><ul><li>Let it compete freely </li></ul></ul><ul><ul><li>Re-architect the product to fit the on-demand simplicity mantra </li></ul></ul><ul><ul><li>Learn to eat your own lunch </li></ul></ul><ul><ul><li>Example: NetSuite </li></ul></ul>
  9. 9. What to do? <ul><li>If you want to provide a SaaS option to existing customers </li></ul><ul><ul><li>Don’t re-architect the product </li></ul></ul><ul><ul><li>Have existing sales team and channels sell the hosting option as an add-on service </li></ul></ul><ul><ul><li>Example: Oracle On Demand </li></ul></ul><ul><li>Don’t get the two confused! </li></ul>

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