Software as a Service: 
The Business Model

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Here are the slides from a talk at the St. Louis Innovation Camp 2010, on the SaaS business model. There is also audio, text, and (eventually) video available on my web site.

UPDATE: You can watch a video of my giving this talk, on my web site:

http://kylecordes.com/2010/saas-video

Published in: Technology, Business
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Software as a Service: 
The Business Model

  1. 1. Software as a Service: The Business Model Kyle Cordes St. Louis Innovation Camp 2010
  2. 2. About Kyle Cordes • Blah, Blah, Blah. • You know where to find me.
  3. 3. SaaS Experience • Mobile Workforce Management LLC • Vertical Market: Utility Locating Industry • SaaS firm I co-founded in 2004 • Sold in 2009 • Lessons from that experience, in this talk
  4. 4. Start with an Idea http://www.flickr.com/photos/cayusa/
  5. 5. Fire up your IDE (from the Eclipse web site)
  6. 6. This is Power http://www.flickr.com/photos/vattenfall/
  7. 7. Software Business Deliver More than Software
  8. 8. 1) Delivery of the Bits http://www.flickr.com/photos/giorgos-androulidakis/
  9. 9. 2) License to Use http://www.flickr.com/photos/nobmouse/
  10. 10. 3) Hosting Perhaps with tidier racks than I have pictured here. http://www.flickr.com/photos/mpancha/
  11. 11. 4) Operations http://www.flickr.com/photos/jemimus/
  12. 12. 5) Support http://www.whatheck.com/uploaded_images/headset-hottie-759827-759993.jpg I present this stereotype as a commentary on advertising.
  13. 13. Model: Consulting • Sell Labor, by the Hour or Project • Provide the 5 pieces in whatever way a customer asks for them
  14. 14. Model: License Sale • Sell #1 (Delivery) and #2 (License) up front • Sell a service contract for support
  15. 15. Model: SaaS • Bundle the whole thing, #1 #2 #3 #4 #5 • Sell it per-something / per-time: • Per user • Per hour • Per transaction • Percent of transaction amount
  16. 16. Recurring Revenues http://www.northwestmuseum.org/
  17. 17. Sporadic vs Recurring
  18. 18. Customer Like SaaS • Little Money Up Front: Less Risk • No hosting effort, pain, management • Easy Scaling Up • Easy Scaling Down http://www.flickr.com/photos/geoff_mv/
  19. 19. Except When They Don’t • Less Control • Less Leverage • Less Customization • No Unique Asset http://www.flickr.com/photos/realestateclientreferrals/
  20. 20. Customizations • “No” • Per-Hour: can of worms • Expedite Fee • Increase Per-Unit / User / Month Charge http://www.flickr.com/photos/benmcleod/
  21. 21. Sounds great, how do I get started?
  22. 22. Starting a SaaS Business Here is a • Pick a market bootstrap • Have some money on approach. hand There are • Write v 1.0 other ways, • Sell customers 1..n of course. • Reach Break Even •
  23. 23. SaaS Business Model 1) Write Software 2) Sell it per-something 3) Profit http://www.flickr.com/photos/bullionvault/
  24. 24. kylecordes.com http://www.flickr.com/photos/thetruthabout/

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