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THINKstrategies Software Business 2008 Presentation


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THINKstrategies Software Business 2008 Presentation

  1. 1. Overcoming the Organizational Barriers to Transforming Your Software Business into an On-Demand Company Presented by, Jeff Kaplan Managing Director THINKstrategies [email_address] 781-431-2690
  2. 2. Agenda <ul><li>State of SaaS </li></ul><ul><ul><li>Key Market Drivers/Trends </li></ul></ul><ul><ul><li>Market Opportunities/Challenges </li></ul></ul><ul><li>Migrating to SaaS </li></ul><ul><ul><li>Key Operational Challenges </li></ul></ul><ul><ul><li>Industry Best Practices </li></ul></ul>
  3. 3. Primary Drivers of SaaS <ul><li>Changing competitive forces </li></ul><ul><li>Changing workplace requirements </li></ul><ul><li>Changing economic & ecological conditions </li></ul><ul><li>Changing technologies </li></ul><ul><li>Changing priorities & sourcing policies </li></ul>
  4. 4. An Equation for Greater Market Opportunities Economy Uncertainty Tighter Budgets Greater SaaS Opportunities + =
  5. 5. SaaS Evolution SaaS 1.0 SaaS 2.0 <ul><li>Standalone point apps </li></ul><ul><li>Focus on ease of use/price </li></ul><ul><li>One size fits all, minimal customization </li></ul><ul><li>Horizontal applications </li></ul><ul><li>Limited interoperability </li></ul><ul><li>Emphasis on lower TCO </li></ul><ul><li>Multidimensional platforms </li></ul><ul><li>Focus on added functionality </li></ul><ul><li>Multiple configurations, greater versatility </li></ul><ul><li>Vertical/industry solutions </li></ul><ul><li>Easier integration </li></ul><ul><li>Emphasis on higher ROI </li></ul>
  6. 6. Shifting Adoption Patterns Unilateral End-User, SBU Adoption of SaaS Solutions Enterprise-Wide Acceptance and Adoption of SaaS
  7. 7. SaaS Expands from Front- to Back- to Inter-Office Apps BUSINESS APPLICATIONS CRM SFA … Collaboration SCM … ERP Finance … Front Office Inter Office Back Office SaaS Market ‘Gold Rush’
  8. 8. Top Ten Showplace Application Categories Source: SaaS Showplace 44 Messaging 46 eCommerce 47 Human Resource Management (HRM) 49 Marketing 55 Enterprise Resource Planning (ERP) 62 Project Management 67 Document Management 78 Accounting/Financial 80 Collaboration 103 Customer Relationship Management
  9. 9. Top Ten Showplace Industry Categories Source: SaaS Showplace 42 Software 43 Telecommunications/xSPs 55 Professional Services 63 Government 69 Retail 72 Healthcare 80 Technology 91 Manufacturing 102 Banking/Financial Services 110 SMBs
  10. 10. SaaS Expands from Business Apps to IT Management BUSINESS APPLICATIONS CRM SFA … Collaboration SCM … ERP Finance … Front Office Inter Office Back Office Security Systems Mgmt … Network Mgmt Remote Access … Data Protection Storage … IT Management
  11. 11. Changing Competitive Landscape & & & AimNet Solutions ever dream
  12. 12. Cloud Computing: Today’s New Enablers
  13. 13. New Challenge: Cloud Computing Outages “ Amazon S3 Outage Rains On Cloud-computing Parade” “ Outages Force Cloud Computing Users To Rethink Tactics”
  14. 14. Open Source: The Good, Bad and Ugly <ul><li>The Good </li></ul><ul><ul><li>Proliferation of tools/solutions </li></ul></ul><ul><ul><li>Accelerated Development </li></ul></ul><ul><ul><li>Concepts of Community </li></ul></ul><ul><li>The Bad and Ugly </li></ul><ul><ul><li>Lower barriers to entry </li></ul></ul><ul><ul><li>Escalating price competition </li></ul></ul>
  15. 15. Ad-Supported SaaS <ul><li>“ iTunes of IT” </li></ul><ul><li>250K users </li></ul><ul><li>50,000 new users in last 2 months </li></ul><ul><li>Advertisers has grown from 4 to 40 </li></ul><ul><li>Market Opportunity, </li></ul><ul><ul><li>SMB IT pro = $125,000 annual budget. </li></ul></ul><ul><ul><li>250k users = $32B in annual spend </li></ul></ul><ul><ul><li>Growing at more >$3B per month! </li></ul></ul>
  16. 16. The Meaning of Community in the SaaS Market <ul><li>Real-time, aggregated data </li></ul><ul><li>Meaningful benchmark studies </li></ul><ul><li>Practical best practices forums </li></ul><ul><li>Continuous updates, new ideas </li></ul><ul><li>Dynamic toolkit clearinghouse </li></ul>
  17. 17. Key Customer Concerns & SaaS Industry Responses <ul><li>Concerns , </li></ul><ul><li>Reliability </li></ul><ul><li>Security </li></ul><ul><li>Customization </li></ul><ul><li>Compliance </li></ul><ul><li>Integration </li></ul><ul><li>Customer Support </li></ul><ul><li>Responses , </li></ul><ul><li>SLAs </li></ul><ul><li>Certifications </li></ul><ul><li>User Configurations </li></ul><ul><li>DR/BC </li></ul><ul><li>Connectors </li></ul><ul><li>Online/Pro Services </li></ul>
  18. 18. Enterprise Expectations & Challenges for SaaS <ul><li>Can you provide a better user experience? </li></ul><ul><li>Can you create a different type of community? </li></ul><ul><li>Can you support hybrid environments? </li></ul><ul><li>Can you permit rapid on-boarding? </li></ul><ul><li>Can you track service usage levels? </li></ul><ul><li>Can you measure performance levels? </li></ul><ul><li>Can you identify & resolve service issues? </li></ul><ul><li>Can you verify SLA compliance? </li></ul>
  19. 19. On-Demand Services & The IT Industry Inversion Services Technologies Past Future The IT Industry Inversion
  20. 20. Key Challenges Facing Established ISVs <ul><li>Re-architecting applications </li></ul><ul><li>Re-structuring revenue models </li></ul><ul><li>Repositioning marketing </li></ul><ul><li>Re-orienting sales/support staff </li></ul><ul><li>Reducing operating costs </li></ul>
  21. 21. SaaS Lifecycle Requirements User Centricity Agile Development Transaction Mgmt System Security Certifications Service Orientation Professional Services Online Procurement Try & Buy Trials Tele-Sales Web/Search Marketing Service Delivery Infrastructure Ecosystem of Partners Web Support SLAs
  22. 22. SaaS vs. Legacy SW Economics Cost of Goods Sold (COGS) R&D SG&A EBITDA Source: McKinsey, May 2007
  23. 23. No One Likes to Sell Services <ul><li>Raises concerns about the product. </li></ul><ul><li>Complicates the sale/extends sales cycle. </li></ul><ul><li>Seldom properly incented. </li></ul><ul><li>Weak value proposition. </li></ul><ul><li>Poor track record. </li></ul>
  24. 24. Living in a Hybrid World <ul><li>Most enterprises will seek mix of on-premise & on-demand solutions. </li></ul><ul><li>Users prefer choice. </li></ul><ul><li>Users seeking on-demand/on-premise integration. </li></ul><ul><li>‘ Applets’, Appliances, etc. will permit off-line use and synchronization. </li></ul>
  25. 25. Hybrid Model Pitfalls <ul><li>Balancing, </li></ul><ul><li>Multiple Offerings </li></ul><ul><li>Multiple Codes/Versions </li></ul><ul><li>Differing Buyers </li></ul><ul><li>Multiple Sales Channels/ Compensation Plans </li></ul><ul><li>Differing Revenue Recognition </li></ul>
  26. 26. Channel/Supply Chain Opportunities Legacy ISVs New SaaS Providers Enabling Technology Vendors <ul><li>Offshore SW Developers </li></ul><ul><li>3 rd party SW platforms </li></ul><ul><li>3 rd party HW systems </li></ul>xSPs <ul><li>Hosting companies </li></ul><ul><li>Carriers </li></ul>Channel Partners <ul><li>Distributors </li></ul><ul><li>VARs/Integrators </li></ul><ul><li>eCommerce Sites </li></ul>Corporate Customers Consumers
  27. 27. SaaS Ecosystems – The New Channel Jamcracker
  28. 28. New Channels to Market? <ul><li>Banks </li></ul><ul><li>Insurance Companies </li></ul><ul><li>Retailers </li></ul><ul><li>Web companies </li></ul><ul><li>PS Firms </li></ul>
  29. 29. Corporate Positioning Roadmap Technical Features/ Solution Differentiators Strategic Vision/ Business Benefits Competitive Advantages <ul><li>Success Factors: </li></ul><ul><li>Compelling Value Proposition </li></ul><ul><li>Effective Mktg. Messages </li></ul><ul><li>Defined Market Focus </li></ul><ul><li>Unique Technical Competencies </li></ul><ul><li>Strong Products/Solutions </li></ul><ul><li>Solid Customer References </li></ul><ul><li>Articulate Spokespeople </li></ul><ul><li>Targeted Press/Analysts </li></ul><ul><li>Consistent Internal/External Communications </li></ul><ul><li>Continuous/Aggressive Effort </li></ul>
  30. 30. THINKstrategies’ SaaS Balanced Scorecard <ul><li>Target Market Segmentation </li></ul><ul><li>Competitive Landscape </li></ul><ul><li>Corporate Management </li></ul><ul><li>Functional Capabilities & Features </li></ul><ul><li>Solution Packaging </li></ul><ul><li>Pricing & Revenue Realization </li></ul><ul><li>Service Delivery Platform & Architecture </li></ul><ul><li>Security and Availability Assurance </li></ul><ul><li>Service Provisioning, Billing and Metering </li></ul><ul><li>Contracting, SLAs and Reporting </li></ul><ul><li>Sales Strategies and Skills </li></ul><ul><li>Strategic Partnering/ Ecosystem Strategies </li></ul><ul><li>Marketing and Positioning </li></ul><ul><li>Customer Support Capabilities </li></ul><ul><li>Financing and Capital Structure </li></ul>
  31. 31. Key Characteristics of a Winning SaaS Team <ul><li>CEO – Visionary, but disciplined </li></ul><ul><li>CFO – Disciplined, and flexible </li></ul><ul><li>CMO – Thought-leader, but focused </li></ul><ul><li>CTO – Knowledgeable, yet practical </li></ul><ul><li>VP, Sales – Persistent, and creative </li></ul><ul><li>Product Development – Agile, and service-oriented </li></ul><ul><li>Sales – Service-oriented, not product-centric </li></ul><ul><li>Support – Business-oriented, not technical </li></ul>
  32. 32. Can You Take Your Team Into The Future? Software Services Business Services Information Services Market Evolution
  33. 33. For More Information… <ul><li> </li></ul><ul><li> </li></ul><ul><li>[email_address] </li></ul>