Category Archives: Pricing

Where are the opportunities for new SaaS ventures?

Almost four years ago, I wrote a post that argues that SaaS will eventually win over on-premise software. At the time, Larry Ellison, Oracle CEO, still argued that SaaS was a fad.

Now, in 2015, it’s clear that SaaS has won the “delivery”. What’s more, SaaS has also created new markets, penetrating customer segments for which an on-premise software solution was cost prohibitive in the past. Dozens if not hundreds of successful SaaS vendors are hitting the market and seem to be covering every single business need in every vertical.

Are there still opportunities for new SaaS ventures?

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Are small businesses doomed to fail, or can SaaS help?

According to the Bureau of Labor Statistics in the US, only 44% of small businesses successfully make it through four years of operation. One reason is that because of their size, small businesses cannot master the skills that larger organizations have (such as marketing, sales, service and technology). So, it should not be a surprise that they have a hard time competing in the marketplace.

One of the areas that has been a weak spot for small businesses is the use of technology in general and software in particular.

From a software vendor standpoint, small businesses were traditionally overlooked as a target market. In fact, in the 1990’s, common wisdom was that successful software vendors should focus on large enterprises, where the money resides, and apply the direct sales model, with a $100K+ price tag. The wisdom at the time was that smaller price tags did not justify a direct sales force, and required indirect selling. Selling through resellers, however, was and still is hard to crack. It’s hard to get resellers to commit to sell a product before it gets traction. And even later, it’s hard to educate resellers to sell a product proficiently.

From a small business point of view, buying software is—simply put–not easy. How can a small business be expected to have the skills to evaluate new software? How can they be expected to master how to operate the software? How can they be expected to integrate it with other software? And, when it comes to on-premise software, how can they afford to deploy and manage the software?

But then SaaS came along.

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How SaaS and Agile Software Development coevolve as a disruptive innovation

Agile Software Development is continuously gaining momentum in the last decade since the introduction of the Agile Manifesto in 2001. Software-as-a-service (and cloud-based web applications in general) is also gaining momentum in the last decade, roughly during the same period. Is this a coincidence?

Time and again, the technology landscape exhibits parallel fast advancement of synergetic technologies and methodologies.

For example, in the late 90’s, my colleague Elan Dekel has started a company called EarthNoise, offering a video sharing website. Sounds familiar? In 1995, a company called YouTube was founded with a similar idea. It was acquired in 2006 by Google for $1.65b. EarthNoise, on the other hand, went out of business as early as 2001. In the four years that passed, broadband internet access became popular, and so did digital video cameras. The three areas—video sharing, digital cameras and broadband internet—evolved hand in hand to create a new phenomena—user generated video on the web. The ability and desire to share videos online drove increased adoption of broadband internet and digital video cameras (and yielded brand new products such as the now-defunct Flip). The increased consumer demand for broadband and cameras drove down prices and accelerated technology advancement. This in turn increased adoption of video sharing sites. Now, video sharing sites are an inseparable part of our lives.

Arguably, the success of the iPhone is—similarly—largely due to technologies that co-evolve with smartphone advancement: 3G connectivity, Wi-Fi connectivity, touchscreen technology, low-consumption processors and—at least to a certain degree—HTML5.

I would assert that software-as-a-service and agile development methodologies are likewise coevolving and drive each other’s adoption. It may not be obvious, but this creates a spiral effect (or—in Geoffrey Moore’s terms—a tornado) of disruptive innovation that will eventually displace many of the software development paradigms.

Here’s why.

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Selling SaaS over the Web

Ariel Finkelstein, Kampyle CEO and Sharon Magen, VP of Sales and Business Development at ClickTale spoke today at the 10 Laws of Building a SaaS Company in Israel, Part II: Selling SaaS Online meeting.

Kampyle has seen online sales bounded at a price point of around $350/month. Beyond this point, they’ve seen customers requesting sales assistance, and the sales cycle completing over the phone using Inside Sales.