Software-as-a-Service (SaaS) presents an enormous opportunity for companies seeking to save money, and for providers of all types, including integrators, VARs, telecommunications carriers, software vendors, and any entrepreneur looking for the next wave of technology. Marketing SaaS calls for a different approach though, since it represents a major departure from the traditional, “mainstream” way of selling software, and as such, there are a lot of obstacles to overcome before you can make the sale.
Software-as-a-Service is a simple concept. Users, instead of purchasing multiple licenses for each software package, hosting the software on their own servers, and managing the software in-house, relegate all of those functions to a third party. The advantages are immediately obvious. The true cost of software lies not in the retail price on the box, but in the total cost of operation (TCO), which includes ongoing maintenance and installation. As any IT manager knows, this cost can be substantial over the lifetime of the software.
At the same time, the advantages are countered by drawbacks, both real and perceived. IT managers are notorious for wanting to maintain control over their environments. The IT manager is reluctant to allow anybody, no matter how much of a “power user” they may be, to install their own software, make their own upgrades, or configure their own PCs in any way; and rightly so. Without maintaining this level of control over the network environment, the door could be opened to misconfiguration and security breaches that could shut down the network and rack up costs that could be disastrous. The IT manager is therefore often reluctant to turn control over the application environment to a third party. Of course, there are answers to these concerns, which will be addressed later in this book.
The reason for the recent upswing in SaaS offerings can be attributed to three different participants: software vendors, end users, and channel partners. The needs and demands of all three have converged at the same time, making this an ideal time to move into the SaaS marketplace. Major software vendors, as shown later on in this paper, have started to roll out prominent SaaS initiatives. End-users have started to demand more of these types of offerings, having finally gotten accustomed to the idea of hosted services thanks to the dynamics of Web 2.0 technology and mobile computing. And finally, channel partners, facing increasingly narrow margins on traditional hardware and software offerings, are looking for new alternatives to supplement their sales efforts.
The Web 2.0 Revolution
To understand SaaS, one must first understand Web 2.0, which has formed the enabling technology behind it. While it’s true that SaaS existed before the Web 2.0 revolution in some forms, the innovations of Web 2.0 technology is what caused SaaS to gain prominence as “the next big thing.”
As a tool for sales presentations, “Web 2.0” is a buzzword that is worth knowing. Most decision-makers have by now accepted the realities of Web 2.0, and are already enjoying many of its benefits—many of which have resulted in increased productivity, cost savings, and a better level of communication. Positioning SaaS as the next phase of Web 2.0 will tie it in with this positive technology trend.
Why SaaS Sales? Because:
- No need for large capital expenditures. Because there are no up-front licenses involved, costs are significantly reduced. Also, the infrastructure required to run the software in-house, including additional servers, are not required.
- Less need for internal training. Internal training can be very costly. And while some training may still be necessary, the degree of training is often less than what would be required for in-house software.
- Lower staffing requirements. The internal staff required to run in-house software, in addition to the internal staff required to maintain the additional servers and equipment that would otherwise be necessary, are no longer needed.
- Reduce startup costs. Costs to get started with new technology are one of the biggest expenses for a new company, and deploying SaaS helps to keep those costs down by minimizing the need for additional servers, extra staff, and up-front licensing fees.
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