What's new for SaaS

10 new ideas (not 11)

Here is my current take on some trends for Software as a Service.  You've probably heard a lot of other "new ideas" that are no longer new.  "New," as it turns out, is actually kinda hard to come by.

1. Software without borders: Applications are becoming less and less restricted to a particular organization and more oriented around user networks.  This has the effect of making the applications more user-centric rather than organization-centric.  Paradoxically, this is good for the organization since it will lead to better adoption.

2. It’s the product, Stupid: Due to the emphasis of  “Try It Buy It” approaches for marketing SaaS, product management and product marketing teams are forced to push more of the “whole product” and “solution selling” concept back into the product itself.  The product needs to incorporate business process into the product features.

3. First Impressions first: SaaS applications have a few minutes to make an impression.  I like to focus on the first 3 minutes.  If you can create a sense of value in 3 minutes, you’re off to a great start.  That said, you better also focus on the first 3 years so you don’t poop out after 3 days.

4. Pinching pennies: COGS and Gross Margins are financial metrics that should drive the technology strategy; as Deming might have predicted, the ability to support a reliable, scale-able service at a low cost is a bigger and bigger advantage.

5. Tier 1 Support reigns: Now that there is less and less room for fancy, high priced consultants to answer the fancy, high priced questions,  Tier 1 support will take on a bigger and bigger responsibility to represent the company and answer tough questions.  Will a good FAQ cut it?  I doubt it.

6. Product alliances: SaaS vendors will dedicate more resources to integration partnerships with other SaaS vendors.  Right now, they talk about it but they don’t do it very well.  This may be the best answer for the elusive “channel” for SasS vendors.  SaaS doesn’t have enough pork for the traditional channels.

7. Video trumps text: SaaS products will begin to use more and more video for training, support, documentation, etc.  It’s cheap and easy and more interesting to look at.  Text based tools are being replaced by A/V.

8. SaaS for SaaS: SaaS companies are going to start outsourcing more and more parts of their own operations.  This is important because they can get the same kind of leverage from full service hosting providers that they provide to their customers.   These kinds of arrangements will also lead to natural SaaS aggregations of applications into end-to-end partnerships.

9. Grid Computing muddle:  Utility computing remains an open question and will be driven by the cost to provide the service.  In some cases, you may be able to get your monthly operating costs per user down to a low enough price that grid computing won’t offer enough of a benefit.  In other cases, it might provide just the kind of cost advantage that makes it worth the effort.  In either case, SaaS vendors should build applications that are “cloud compatible” so that they can take advantage of grid computing when it makes good risk/reward sense.

10. Tech takes a back seat : There are fewer and fewer technical hurdles to get a SaaS application to market than when we started this in 1999.  Now the emphasis is shifting more to marketing strategy; the technology, while obviously essential, is taking more of a back seat.