Corey's step into the world of Blog publishing.

Sunday, February 28, 2010

SaaS - why it is different

Whoever coined the term "software as a service" is a genius. If you are providing some kind of service that uses software as its primary front-end, you're a SaaS provider. Your customers view what you provide as a service, and every time they pay that monthly bill, soon they will wonder what they're paying for every month (yeah, even if it is a "nominal" amount). Your business model might not reflect it yet, but it better soon.

When you're business model is SaaS, you know that you customer can switch away from you at any time. Sure, you build up switching costs and barriers to entry, but certainly there is another provider ready to displace you - and working hard to do it in fact. In order to prevent that customer from walking away, you need to provide a few things, and provide them very, very well.

While SaaS might seem like a panacea for those familiar with enterprise software, it comes with its own set of problems. The SaaS business model is no different, in that your entire organization must be structured to support it. This perhaps means uptime over features (or maybe a few great features over many average ones). While some things are easier, others are harder. Your sales approach changes. The sales cycle changes. Your distribution requirements change. The value proposition is different for SaaS than they are for enterprise software.

So then, how is it different?