There’s a humdinger blog argument going on at the moment amongst the SaaS commentators. I lump myself with that bunch so I decided to chip in my little bit.
Anshua Sharma started it off with this post criticising the SaaS proponents tendency to look at more traditional hosted apps or ASP models critically in comparison to pure-play SaaS. Phil Waineright replied pretty much saying that Anshu’s post was a legacy ISV perspective that aimed to protect their own interests to either slow the move to SaaS or control it to “ease the pain”. Phil states that;
“SaaS is a journey, and the destination is a shared services, multi-tenant mode”
Bob from Smoothspan then stepped into the fray with this post. In a round about way Bob discusses the viability or otherwise of a publicly listed ISV moving to SaaS. Given that publicly listed companies live and die on revenue, and given that SaaS is a disruptive technology that at the very least impacts on the timing of their revenue cycle, the move to SaaS is scary for them.
Bob has a suggestion for ISVs wanting to move to SaaS;
“…a different proposal for those unwilling to go cold turkey to SaaS: you have to create protected game preserves in which to pursue growing a SaaS business. These are markets defined by a variety of factors (product, geography, vertical industry, etc.) where you choose to limit yourself to a pure SaaS offering.”
Bob hits the nail on the head here. At first instance it is immensely difficult for a legacy ISV to move to SaaS. This difficulty becomes almost an impossibility if they want to make the move completely in their current space (ie taking desktop widget 1.0 and creating SaaS widget 1.0 with the same functionality)
Firstly then if an ISV wants to move it needs to create a siloed vertical within which it can create a SaaS product. Ideally this vertical will stand somewhat to the side of the traditional customer, thus avoiding the canibilzation tendency. With this strategy they can create a viable SaaS produt. But what then? Is it practical to shift an existing customer base within an ISV to SaaS. Maybe but it’s a hard sell. To be honest my advice for ISV’s wishing to chase the tide of SaaS revenue woul be to diversify their horizontal offering – if you will they should continue to sell desktop Widget 1.0 but create SaaS Fidget 1.0 – selling to a different market.
The second very important point here is the SaaS/s and SaaS/v issue. ISV’s tend to see a move to SaaS as being ‘the same product piped down a different channel”. This utterly ignores the core benefit of SaaS. SaaS allows a network to be formed that can aggregate value for users and thus revenue for the SaaS business. Unless the move to SaaS includes both value ad AND the new delivery method, it will be doomed to medicrity at best and failure at worst.
