Category Archives: Salesforce.com

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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Workday IPO: Another Nail in the Coffin of On-Premise Software

On Friday, Workday (NASDAQ: WDAY) held the biggest tech IPO since Facebook.

Unlike Facebook, Workday does not run a consumer-facing business that claims to have a billion users. Instead, it’s a software-as-a-service solution provider for human resources management (and nowadays adjacent solutions). While not anything as sexy as Facebook, the company is now valued at over $8b.

Why is the market valuing Workday so highly? As usual, it’s a combination of several factors (some very likely exaggerated). But most importantly, is the belief that the new SaaS solutions will eventually replace many of the existing on-premise solutions. Or, as  Aneel Bhusri, Workday co-founder said in an interview, “the incumbents are not prepared.”

Can Oracle buy its way into SaaS, or is it doomed?

A few interesting articles around Oracle’s dance with SaaS, spurred by its recent acquisition of Taleo (CRM/HCM), for $3.4 billion:

It will certainly be an interesting ride.

Business Components of a SaaS Solution

Today, Google announced that its Google App Engine platform-as-a-service solution would be leaving Preview stage later this year.

The cloud computing concept has gained a lot of momentum in the last few years. Classification of the  solution space has somewhat focused on infrastructure-as-a-service (IaaS), which is typically associated with Amazon’s platform, and platform-as-a-service (PaaS), often associated with Salesforce Force.com and the aforementioned Google App Engine. In a previous post, I pointed to a short article that summarizes these terms.

A lot of debate has taken place around the economics of cloud computing, and around the advantages and disadvantages of the PaaS model. However, little discussion has taken place around additional (higher level; or: business) components that are needed to successfully run a SaaS business, in addition to the core infrastructure and the basic platform.

The diagram that follows is an outline of components that are part of the architecture of (almost) every SaaS business.

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