SaaS ISVs need to leverage the value of SaaS throughout their organization
Sinclair Schuller posted a great article over at SaaSBlogs entitled: How can a SaaS ISV drive down sales and marketing costs? It’s an excellent post, and well worth the read as a precursor to this post.
One of the key assessments that Sinclair makes early on in his post, is the fact that many ISVs are not exploiting the potential of the SaaS delivery method. I totally agree. I think that many ISVs have yet to even come close to leveraging the value that the SaaS delivery method affords them.
SaaS as a delivery method provides ISV’s with a foundation for innovation throughout their entire business. It provides ISVs with multiple advantages and ways to differentiate and add substantial value to their business, not just their product offerings. Using the SaaS delivery method simply to deliver Regular Old Functionality (ROF) is a very sophomoric approach in my opinion.
Ben Kepes touchs on this topic here as well.
The first and probably greatest advantage is that SaaS ISVs have a network of users using the same product, all in the same place. Leveraging that network of users in multiple ways is one of the clearest ways in which SaaS ISVs can reduce their sales and marketing costs, yet many fail to do so.
So how can SaaS ISVs leverage that network? Im glad you asked 
SaaS ISVs must create ways for their users to gain value from each other.
To have a SaaS offering and not provide ways for users to gain value from being in close proximity with other users at all times is like a conference, or user group meeting, or a community planning meeting packed with people that are all interested in the same things and all have valuable insights and experiences to share with one another, yet they are physically unable to speak or communicate with one another.
It makes no sense at all.
The value that each tenant of a SaaS application brings to the whole, should be realized by all others in some way, shape, or form. This is something that the SaaS ISV must make possible. This could be through direct communication with one another, by the application functionality improving based on the participation of it’s users, through benchmarks, sharing of data, etc. There are hosts of ways this can be done.
Here are some specific examples:
Aggregate Benchmarks – Sinclair uses the example of a ticketing system providing users with benchmarks related to most reliable hardware, etc. Allowing your users to define the metrics that are valuable to them, and then providing them with those benchmarks and statistics is one great example of leveraging the value of your tenant network.
To take this a step further, ISVs should put in place ways to connect users that are top performers in certain areas, with those that are looking to improve. This could be done via monthly webcasts where top performers talk about their processes and answer questions from other users, or through a blog or simple online discussion board/forum.
Depending on the type of application, ISVs could even enable users/tenants to interact with one another directly, from within the application. That way, if a particular user has a question while they are working in the application, they could find the tenant most knowledgeable based on the benchmarks, and ask them directly.
Sharing Data/Work – The ability to share data/work with other users/tenants is something that provides added value to users, especially in any service based industry where companies work with multiple partners.
A more abstract thought along these lines…
The ability to spread certain work/tasks across the entire tenant/user base, or for the system itself to recognize when the same tasks are being done by multiple users at the same time (or were done recently), and somehow aggregate that effort into something that could be applied globally could have substantial impact in certain verticals. Almost like a living, realtime knowledgebase.
Sharing of Configurations/Add-Ons/Customizations – Giving users the ability to share their customizations, configurations, add-ons and extensions, all from within the application itself is another value add that SaaS ISV’s can provide. Templates that have been created, themes, custom integrations, etc. All of these things leverage the network, and add significant value to an ISV’s core offering.
So how do these things equate to savings in sales and marketing spend?
Sinclair touches on one way – if you can build into your application lasting reasons for your users to have a vested interest in the growth of your userbase (such as many of the above examples), to want others to use your application as well, you can catalyze the most powerful and least expensive form of marketing – Word Of Mouth.
Sinclair’s graph outlines this concept very well.
Two additional ways that SaaS ISV’s can leverage the SaaS delivery method to lessen their Sales and Marketing expenses are:
1) Build a system for analyzing usage data, in order to produce custom, personalized marketing messaging.
For instance, data regarding a customer’s number of users, the functionality those users utilize most, the add-ons or features your customers do not have, etc. This information can be utilized to produce highly personalized and targeted marketing and service from within your application. I venture to say that many of the next generation SaaS apps will have a layer that is so tightly woven into the ISV’s CRM and support systems, that marketing and support/training will be far more efficient and targeted then ever before.
2) Make it simple for users to test out and add features and extensions from within the application.
Your users should be able to pick and choose what features they want to use at any given time, and just start using them. By allowing users to see what additional features are available to them, and even recommending them to them from time to time, based on the data you have compiled about their usage patterns, etc, you remove multiple barriers and hindrances to up sales.
I’ll try and post some additional thoughts on this topic, with some more detailed analysis.
I’d love to hear from some others regarding your experiences and ideas.
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Metricz was started as a way for me (Jesse Kliza) to communicate my thoughts and feelings about business process, strategy, marketing, entrepreneurship, and anything else that may be on my mind related to my professional life.
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excellent thoughts here – we’re all on the same wavelength it seems
Jesse – great expansion and good insight! Implementation of value above ROF can be tricky, but you’ve highlight some excellent implementation mechanics.
UPDATE: You knew it would only be a matter of time before salesforce.com acted:
http://blogs.zdnet.com/BTL/?p=7239
Great ideas on how connecting your isolated users to one another and allowing them to collaborate will provide great benefits for all contributors. There’s a great bit in the book Wikinomics about this; I believe they called it it a mash-up culture.
Hi Daniel,
Thanks! I really believe that there is huge potential there for so many SaaS ISV’s.
One simple example I’ve used before is a shared knowledgebase. Let’s say you have a help desk solution. Maybe late in the day one day on the west coast, Microsoft releases a patch for exchange that then introduces a new bug. This new bug takes down any exchange servers that it is applied to. Users of your help desk software are receiving tons of tickets for problems dealing with this new patch (Exchange server is down). A few users on the west coast find a workaround, and submit it to your share knowledgebase.
The next morning, users of your software on the east coast wake up to a slew of tickets for this same problem. However, they also have the solution available to them and suggested to them, by your software, all thanks to another user.
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Use your passion and geek expertise to liberate the latent creativity that resides in readers, something that works better than the linear, sequential and fast fading stream of comments (yeah, this is recursive). Comments are writing, but lets have something not as we know it. Writing in this box just feel a little klunky, there must be a better way, make a better blog
,
In doing this blog and thinking about this stuff, have you ever had any ideas for what kinds of tools (software, that is) that people could use to do things like share creative ideas in groups, create customer community, etc. etc.?,
I also really enjoy the idea of a group blog mostly because I’ve always been a fan of group blogs a la 37signals. It’s a different take on things that I tend to enjoy, getting to see different opinions, group dynamics, etc.,
I like the idea of a private blog if getting the RSS and reading posts was as simple as public. If there are too many hoops just to get notice of and read a single post it will get frustrating.,
Has he joined Obama in Wonderland where up is down and left is right? What’s “fiscally conservative” about voting for every spending measure in sight?,
I’m not sure what you have against “The Five”. I mean, four of the five panel members are on the right. The only creep is Bob Beckel. I admit, his creepiness makes the show a bit harder to handle. But Greg Gutfeld makes up for it! I LOVE him!! Beckel will probably have a stroke or a heart attack on the show one day and they can just shove him off the stage and continue on.,
Has he joined Obama in Wonderland where up is down and left is right? What’s “fiscally conservative” about voting for every spending measure in sight?,
Kathy, the content you have graciously shared with us every once in a while is both inspiring and entertaining. And a blog is the perfect medium for this. A lot of the content is about your style and creative personality. Thus, I would rule out the community-based ideas. I would probably only read your stuff anyway.,
What is really infuriating is his denial that he was attacking the Tea Party. He was “only reading a WSJ article” on the floor of the Senate. Hannity could have done a better job of hammering on THAT giant piece of brazen hypocrisy.,
I think greater interaction among groups would result (mix up the tech bloggers and the marketers and the VCs and the usability people and, hell, even the sex bloggers)
and really spark some awesome conversations.,
It makes sense about not continuing with “business as usual” — I couldn’t do it, either. But I can’t see ghost writing as being satisfiying for someone with as strong a voice as yours. Being an evangelist for the likes of Apple or Adobe might be cool, but would that let you continue with the stream of consciousness riffs that have obviously been satifsying for you — and been so energizing for us, your readers? Don’t know.,
I do think that by working in a team, it will make it easier for you. The passion moves away from you and to the team of writers, the hate will move with it. Being a part of a groupblog would be a good solution.,
Only reason I voted for him was SARAH. I wasn’t even going to vote until he picked her. I had voted in every election since the late 1960?s.,
Use your passion and geek expertise to liberate the latent creativity that resides in readers, something that works better than the linear, sequential and fast fading stream of comments (yeah, this is recursive). Comments are writing, but lets have something not as we know it. Writing in this box just feel a little klunky, there must be a better way, make a better blog
,
Only reason I voted for him was SARAH. I wasn’t even going to vote until he picked her. I had voted in every election since the late 1960?s.,
I also really enjoy the idea of a group blog mostly because I’ve always been a fan of group blogs a la 37signals. It’s a different take on things that I tend to enjoy, getting to see different opinions, group dynamics, etc.,
I always wondered if the Manchurian Candidate – McLame – would make an appearance. I think he is a victim of Stockholm Syndrome, too.,
I always wondered if the Manchurian Candidate – McLame – would make an appearance. I think he is a victim of Stockholm Syndrome, too.,
I like the idea of a private blog if getting the RSS and reading posts was as simple as public. If there are too many hoops just to get notice of and read a single post it will get frustrating.,
That’s fine for the House and Senate but for president, there is no way any conservative should vote for either Democrat that will be stuffed down our throats next year. The House is the grand prize. If we had someone like Jim Jordan as Speaker and more than the current 3 reliable conservative senators, the president wouldn’t matter.,
Only reason I voted for him was SARAH. I wasn’t even going to vote until he picked her. I had voted in every election since the late 1960?s.,
Just look at the difference just 20-30 rock solid Tea Party conservatives have made in the House already. They’ve turned “1/3 of the government” on its head and started a war between the establishment party and the Tea Party.,
I do think that by working in a team, it will make it easier for you. The passion moves away from you and to the team of writers, the hate will move with it. Being a part of a groupblog would be a good solution.,
I hate to see us lose your input but I wonder if simply publishing articles with no comments enabled and having a members-only forum wouldn’t be a good compromise. There’s something about the immediacy of the response form and the lack of accountability available from anonymity (oh, hypocritical me) that seems to encourage people’s awfulness.,
Use your passion and geek expertise to liberate the latent creativity that resides in readers, something that works better than the linear, sequential and fast fading stream of comments (yeah, this is recursive). Comments are writing, but lets have something not as we know it. Writing in this box just feel a little klunky, there must be a better way, make a better blog
,
Having said all of that, I wonder if Ande’s idea isn’t the best (regardless of what format you choose to go with for the blog). If it was still public with no comments, but you cross-posted entries in a private forum, you could allow people to respond and discuss in a controlled/private environment, but still keep the blog itself public. I’m not sure how much extra work that would be for you, but if it was negligible I would say that’s the best option for running your site the way you have and seem to love, but keeping the riffraff at bay.,
The reality is that the establishment in the Senate HATE CCB, modest as it really is and see the new Boehner plan as an out, since they figure they will get Reid to make a compromise since it is only 22 Billion in cuts.,
Just look at the difference just 20-30 rock solid Tea Party conservatives have made in the House already. They’ve turned “1/3 of the government” on its head and started a war between the establishment party and the Tea Party.,
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