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Bma Presentation 3.19.2009
- 1. SaaS (Software-as-a-Service) Marketing and Sales Success Factors March 19, 2009 by Mark Holman Creekside Consulting
- 2. Agenda Overview of SaaS Industry • SaaS Marketing • Lessons from SaaS • Lessons for SaaS • © Creeside Consulting, 2009
- 3. What is SaaS ?? “Software-as-a-Service” Cloud Computing A working definition Internet Software “A model for software sales and delivery over the internet, which is subscription-based and delivered by the provider with a single instance, multi-tenant approach with upgrades, support and maintenance included for the customer” © Creeside Consulting, 2009
- 4. What makes SaaS unique relative to Traditional Software Traditional SaaS Software Pay as you go, as you need “I need a big check today for Payment all of it” No IT project “Meet my consulting partner” Installation “Obvious” SLA’s and Uptime guarantees “You’re on your own” Service Level Agreement standard Regular updates, instantly “See you in 2 years, I hope Innovation available to everyone you’ve kept patches current” Easy and no cost to provision “I’m sorry we don’t do that, but Trial Use to a prospect for a fee …” Real time visibility into “I’ll call the customer and see Customer Usage “Less customers usage patterns how they’re doing” Obvious” Real time, often built right into “We’ll convene the customers Product Feedback the platform at the annual user meeting” Almost exclusively on the “new “Has anyone installed the next Engineering Focus thing” generation yet?” © Creeside Consulting, 2009
- 5. SaaS on the adoption cycle Saa S Source: Chasm Group, IDC, Creekside Analysis © Creeside Consulting, 2009
- 6. SaaS on the Hype Curve Saa S Source: Gartner, Creekside Analysis © Creeside Consulting, 2009
- 7. Relative equity performance – SaaS vs. Traditional $240 SaaS Group • Salesforce • Omniture • Concur $200 • Netsuite Portfolio Value (2007 = $100) • DemandTec • Taleo • Success Factors • Vocus $160 $120 $100 $90 Traditional Group $80 • Microsoft • Oracle • SAP $60 • Symantec • QAD $40 • Epicor 2007 2008 2009 • JDA • i2 Source: Yahoo, Creekside Analysis © Creeside Consulting, 2009
- 8. SaaS has been growing dramatically faster than traditional software 60% Year-over-Year Revenue Growth by Quarter (%) SaaS (Median = 52%) 50% SaaS Group • Salesforce Traditional Group • Omniture 40% • Microsoft • Concur • Oracle • Netsuite • SAP • DemandTec • Symantec • Taleo 30% • QAD • Success Factors • Epicor • Vocus • JDA • i2 20% Traditional (Median = 11%) 10% 0% Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Source: Edgar, Creekside Analysis © Creeside Consulting, 2009
- 9. SaaS revenues are less volatile than traditional software SaaS Group • Salesforce 20% • Omniture • Concur • Netsuite • DemandTec 15% • Taleo • Success Factors • Vocus 10% SaaS (Median = 10%) 5% Traditional (Median = 2%) 0% Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Traditional Group • Microsoft -5% • Oracle • SAP • Symantec • QAD -10% • Epicor • JDA • i2 Source: Edgar, Creekside Analysis © Creeside Consulting, 2009
- 10. Sample Firm – SalesForce [The SaaS Leader] Fast Facts Revenues ($M) $1,500 CAGR $1,077 M Headquarters: San Francisco, CA 47% • $749 M $1,000 Founded: 1999 $497 M • $500 Focus: CRM/SFA + PaaS • Revenues: $ 1,077 M (2008) • $- Net Income: $ 43 M (4%) • 2006 2007 2008 Customers: 55,400 • CAGR 55,400 Customers 60,000 36% 41,000 40,000 29,800 Strategic Initiatives 20,000 - • Platform-as-a-Service 2006 2007 2008 • Offering “cloud computing” services to Rev/Customer ($) others $19k $25,000 $18k • Development Platform $17k $20,000 • Target ISV’s and corporate developers $15,000 $10,000 • Application Marketplace (AppExchange) $5,000 • Complementary Applications $- • SaaS Applications 2006 2007 2008 Source: Edgar, Creekside Analysis © Creeside Consulting, 2009
- 11. Sample Firm – Intuit [The Hybrid] Fast Facts $2,000 Revenues ($M) Services CAGR $1,500 Headquarters: Mountain View, CA 28% • $1,000 Founded: 1983 • Focus: Tax and Small Business $500 • Revenues: $ 3,071 M (2008) • $- Net Income: $ 477 M (16%) • 2006 2007 2008 Services $1,000 Revenues ($M) Customers: 50,000,000 • CAGR & TurboTax QuickBooks $800 22% $600 $400 Strategic Initiatives $200 $- • Connected Services Strategy 2006 2007 2008 • Connecting to Online (SaaS) Gross Margins (%) • Connecting to Services 90% 100% 74% • Connecting to Community 80% 60% • Acquisitions 40% • Digital Insight (Financial Institutions) 20% • ECHO (Payment processing) 0% • Homestead (Website creation) Services Products Source: Edgar, Creekside Analysis © Creeside Consulting, 2009
- 12. SaaS marketing fundamentals • The customers are on the web – use it for “everything” • B2C marketing mentality • Fortune at the bottom of the pyramid (and the top) • Integrated sales and marketing • Sell a whole solution • Customer satisfaction as a product attribute • Pay as you go, for what you use, pricing © Creeside Consulting, 2009
- 13. SaaS techniques in a down economy • Inside sales / Web selling – no T&E budget to cut • Try before you buy / Trial • The “lay-away” plan • Expense versus capital expenditure • Start small • Give it away © Creeside Consulting, 2009
- 14. 5 Tips from SaaS you can apply to any business 1. Integrate feedback mechanisms into your product / service 2. Offer a trial and/or free product 3. Make the Internet your best friend 4. Sell the whole product / service 5. Increase pricing via editions © Creeside Consulting, 2009
- 15. A few things SaaS Companies still need to learn … • It’s a customer war, not a religious (technology) war • Services are not (always) evil • There’s a channel out there, what are you going to do about it? © Creeside Consulting, 2009
- 16. Sales and Channel Coverage Sales Team ~ 1,500 ~ 15,000 ~ 3,000 ~ 13,000 Channel Partners < 1,000* ~ 20,000 ~ 60,000 > 500,000 (AppExch& referral) Source: IDC, Edgar, Creekside Analysis © Creeside Consulting, 2009
- 17. A few things SaaS Companies still need to learn … • It’s a customer war, not a religious (technology) war • Services are not (always) evil • There’s a channel out there, what are you going to do about it? • How to grow profitably © Creeside Consulting, 2009
- 18. Profitability of “Billion Dollar” Software Companies 24 % 23 % 25.0% 20.0% Net Income (%) 15.0% 10 % 10.0% 4% 5.0% 0.0% Salesforce Oracle Symantec Microsoft [2009] [1992] [2000] [1990] Source: Edgar, Creekside Analysis © Creeside Consulting, 2009
- 19. Thanks !! For a copy of today’s presentation, come see us on the web: www.creeksideconsultinggroup.com/eventsandresources.html