“Code customers only make up 8% of our customer base (today), it shows you the move from code to SaaS, 100% of our customers used to be code”
– this was a quote I noticed on a staff members Twitter account.

He’s right though. We operate a leading project management software company – www.proworkflow.com. We’ve been around since 2002 and have seen a few things over that time. The most obvious is the natural shift from a ‘Code Selling’ model to a ‘Subscription/SaaS’. I say a ‘NATURAL’ shift because over the past 4 years we’ve been marketing a single solution with both code download and subscription option.

When we began, we only offered the code download option, and listed in many code libraries. 2 years later, we started the subscription offering (SaaS/Software as a Service). At no point did we ever really push the deployment option as a marketing angle. Simply put, our approach has always been that we have a solution, and customers can either download locally or host with us on subscription. It’s their choice – not us pushing.

Admittedly, the past 6 months our focus is leaning towards the idea of a full subscription model, but only because the ‘Code Download’ option has declined to the point that it’s obvious it’s a trend. We want to invest our efforts where the best return is for ourselves and the customers.

“So we’re not forcing subscriptions, rather the customers are now ‘preferring’ that option.
– This marks a change in businesses perception of SaaS as a viable and credible option”

At our company, ProActive Software (www.proworkflow.com) code sales these days are nearly non existent as users are looking for SaaS solutions so they can outsource the maintenance aspect of their core software (They just want to use it – not have tech/IT hassles). It may cost them a little more in the long term for SaaS solutions, but we’re finding that in this economy businesses don’t have large piles of cash for traditional perpetual license purchases. They are looking at their cash flow and budgets monthly rather than annually. The Subscription/SaaS model suits this as it’s typically a low monthly price, and they can have the flexibility to leave at any time.

Some software co’s may say “flexibility to leave at any time” is a bad thing, however the opposite is true. SaaS companies must perform, deliver and support at a high standard if they are to keep their customers. This adds value to the customer as it’s not a purchase, but an ongoing relationship with the SaaS co.

Support is better, more proactive. Updates are delivered faster. The feedback loop from customer to developers is closed and all customers start to work on the central solution with a couple of common goals.

Customers – Make suggestions to the software company so the solution will work better for them

SaaS Company – Works hard with customers to perfect the app and systems so they can reduce support load and increase customer satisfaction.

So what’s the difference in regards to the software company making money?

With traditional software solutions (perpetual licensing), the software company would need to make double the sales to double their revenue.

With SaaS companies, the software company only needs to hold onto the customer for twice as long to double their revenue.

And we all know it’s a lot easier to retain a customer than to find a new one! So to put it very simply, With SaaS, the software company MUST satisfy it’s customers not just once, but continually to succeed. And that has to be good for the customers!

About the author:
Julian Stone, CEO – Project Management Software visionary for:
ProActive Software, ProWorkflow, ProWorkflow Blog & Julian101

Julian Stone

Julian Stone here, CEO of www.proactivesoftware.com, developers of www.proworkflow.com (Project management software). I’m a chronic serial creative thinker and have a passion for creativity, business and entrepreneurship. Since the early days at school til the current adult days I’ve been involved with many businesses, in many forms, but the real passion I have is designing ideas from scratch and seeing them through to completion. I love startup businesses and their associated challenges; the fact that the more you learn, the more you realize you don’t know! Every day is an opportunity to meet a new person, learn a new skill, tackle a new challenge! My personal background is 15yrs in graphic design, ad agencies, 3d animation, video editing, multimedia, print, prepress and other creative persuits. About 1999 I was made redundant, mostly due to a failing internet company I was working for at the time. It was also about the time of many ‘.com boms’ where many startups failed due to a distinct lack of any real business plans, paths to revenue or just crazy and unrealistic business ideas. I saw from the inside out, what happens when a company collapses. It was messy, complicated and a lot of people were hurt, both emotionally and financially. However, amidst all this came a blessing! I met my wife, Sarah, who was was also working for the company. Out on the street at age 25 and not many jobs available, it was ’sink or swim’. I chose to ’swim’, and started contracting initially, then business, and haven’t looked back. There have been hard years, and I’ve learned a lot, but heading down the business path rather than employee path was the best decision I’ve made career-wise. I’ve surrounded myself with many like-minded friends and look forward to an exciting ride ahead! This blog is designed to discuss my thoughts on matters (yes, I’m very opinionated) and to share lessons I’ve learned from people, books, experience or the school of life. ;-)

  • A couple of the key benefits of SaaS outlined very nicely there. I particularly like the emphasis on the benefits of having a relationship between software provider and client, something I think is a huge plus, a movement away from the dictatorial mode of more traditional models. As a brief list, what are the key benefits? I’m going to try and think of them…

    Software as a Service
    * No need to manage software – it’s outsourced
    * Service not product payment model more affordable for smaller companies

    Data as a Service
    * No need to manage data – it’s outsourced
    * Data kept up-to-date on rolling schedule (very important)
    * Lots of opportunity for customising the software that uses the data, or at least the UI – & lots of mashup opportunities

    Overall picture
    * Rolling payment model means SaaS and DaaS providers must maintain a good relationship with their clients

    are there any I’ve missed? I’m sure there are. I’ll be thinking about it and posting on my blog once I can remember. Incidentally I should mention that a great SaaS and DaaS platform can be found at theWebService.com which even allows people to manage their own data as a service.

  • Interesting. I think distribution and remote management is the key with Saas. It really outlines the possibility of a ‘free’ economy – something that the world has experienced to a really limited extent. I’m interested in knowing how much proworkflow costs. I currently use Deskaway and its really awesome for the price. Something like $250 a year and i get loads of data storage, analytics, reporting, task management, issue management, scheduling et al. Am really really happy with it – just want to know what other companies are doing.. proworkflow seems to have a lot of heritage wrt to Saas i guess.

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