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Stay ahead of the curveStay ahead of the curveHow to Respond to SaaS Competition
– Fast!
MarketShare, Inc.35 Main Street // Suite 8Wayland, MA 01778Tel: (508) 647-0330www.softwarepricing.com
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 2© 2007 MarketShare, Inc 2
Agenda
• Introduction• Long-Term Changes• Impact Assessment• Potential Actions• Wrap-Up
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 3© 2007 MarketShare, Inc 3
IntroductionMarketShare• Unique focus since 1987
> Pricing computer software
• Practice areas> Value-Driven Pricing> Value-Based Selling> Strategic Discounting
• Results> Improved financial performance> More value from products & services > Increased sales effectiveness
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 4© 2007 MarketShare, Inc 4
IntroductionSaaS Creates Excitement!• Start ups and their investors• Journalists, analysts, consultants• Disaffected customers• Traditional vendors on autopilot• Something new for everyone
> SW folks are addicted to “change”> So are customers…
… but not when it affects business processes
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 5© 2007 MarketShare, Inc 5
IntroductionWhy the Excitement?• Something new
> Easy to try/buy/use> Single priced access, maintenance and support> Low price points> Bite-sized chunks of products> Standard, web-native software> Centralized incremental updates> Remote management of infrastructure
• Something old> Speed and customer service (Consumer marketing)> Old-style computing (Timesharing, Mainframes)> Early desktop apps (Simple, Compact)
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 6© 2007 MarketShare, Inc 6
IntroductionSaaS Causes Long-Term Change• Extends meaning of “Product”• Challenges industry business model• Delivers broader customer benefits• Changes competitive playing field
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 7© 2007 MarketShare, Inc 7
IntroductionTakeaways• Some companies more affected than others
> Little change required for the lucky few
• Near-term actions possible> Can blunt competition> Can make you more competitive
• Go back to fundamentals> Business planning> Customer segmentation> How you create real value
• What doesn’t kill you will make you strong
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 8© 2007 MarketShare, Inc 8
Agenda
• Introduction• Long-Term Changes• Impact Assessment• Potential Actions• Wrap-Up
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 9© 2007 MarketShare, Inc 9
Long-Term ChangesExtends Meaning of “Product”
• Product• Modules• Services• Maintenance• Support• Payment
• Product• Modules• Services• Maintenance• Support• Payment• Product structure• Payment structure• Infrastructure• SLA• Vendor risk
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 10© 2007 MarketShare, Inc 10
• Limited feature set• Packaging simplicity• Ordering flexibility• Uniform ongoing payments• Relationship driven
Long-Term ChangesChallenges Industry Business Model
• Feature laden products• More complexity• Standard terms• Hi upfront; low ongoing payments• Transaction driven
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 11© 2007 MarketShare, Inc 11
Long-Term ChangesDelivers Broader Customer Benefits
SaaS FeatureCustomer Benefit from SaaS
Self-provisioningEase of administration
Price levelBilling termPayment flexibility
Simple to use, installFaster time to value
Incremental releasesLess operational disruption
AccessibilityEasy deployment
Easy to trialCustomer service orientationLower implementation risk
IT and SW from one vendorMore accountability
Payments aligned with benefitsSmall packaging incrementsLess financial risk
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 12© 2007 MarketShare, Inc 12
Long-Term ChangesAlters Competitive Playing Field
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 13© 2007 MarketShare, Inc 13
Long-Term ChangesAlters Competitive Playing Field
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 14© 2007 MarketShare, Inc 14
Long-Term ChangesWhat to Do?• Who needs to respond?
> Most vs. least affected
• How to respond?> Greatest impact on prospects/customers
• When to respond?> Timing, pace
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 15© 2007 MarketShare, Inc 15
Agenda
• Introduction• Long-Term Changes• Impact Assessment• Potential Actions• Wrap-Up
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 16© 2007 MarketShare, Inc 16
Impact AssessmentExisting Vendors• Usually have an edge
> Products work> Have customers, revenue> Established track record
• History can be an issue> Business practices> Reputation in market> Installed base needs special handling
• Change can be hard> Have something to lose> Maintaining growth, profitability> Executives avoid career-limiting moves
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 17© 2007 MarketShare, Inc 17
Existing VendorsEvaluate Your Position
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 18© 2007 MarketShare, Inc 18
Impact AssessmentEvaluate Your Options• Framework for evaluation
> Which SaaS benefits to deliver> What it takes to deliver the benefits
• Delivering benefits requires action• Evaluate actions
> How long will it take?> How much will it cost?> How hard will it be?
• Assess overall risk
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 19© 2007 MarketShare, Inc 19
Evaluate Your OptionsWhich SaaS Benefits to Deliver?
H
H
H
E
E
E
H
H
L
L
S
S
S
F
F
H
H
H
L
L
Payment flexibility
Ease of administration
Customer Benefit from SaaS
Faster time to valueLess operational disruption
Easy deploymentLower implementation risk
More accountabilityLess financial risk
Overall Risk
How Hard
How Much
How Long
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 20© 2007 MarketShare, Inc 20
Agenda
• Introduction• Long-Term Changes• Impact Assessment• Potential Actions• Wrap-Up
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 21© 2007 MarketShare, Inc 21
Existing VendorsEvaluate Your Position
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 22© 2007 MarketShare, Inc 22
Potential ActionsPosition Determines Action
Mandatory dot-releases
Simplify user interface
Browser accessible
Premium support options
Flexible bill presentmentWeb-based license admin
Single tenant hostingUsage reports
Term-limited trial“Bite sized” products
Lower entry pricesChoice of payment plan
Potential Actions (Examples)
H
H
L
L
VendorRisk
Customer Benefit From SaaS
Ease of administration
Payment flexibility
Faster time to value
Less operational disruption
Easy deployment
Lower implementation risk
More accountability
Less financial risk
IncumbentVendor Position
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 23© 2007 MarketShare, Inc 23
Potential ActionsPosition Determines Action
Mandatory dot-releases
Simplify user interface
Browser accessible
Premium support options
Flexible bill presentmentWeb-based license admin
Single tenant hostingUsage reports
Term-limited trial“Bite sized” products
Lower entry pricesChoice of payment plan
Potential Actions (Examples)
H
H
L
L
VendorRisk
Customer Benefit From SaaS
Ease of administration
Payment flexibility
Faster time to value
Less operational disruption
Easy deployment
Lower implementation risk
More accountability
Less financial risk
Incumbent
Known
Vendor Position
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 24© 2007 MarketShare, Inc 24
Potential ActionsPosition Determines Action
Mandatory dot-releases
Simplify user interface
Browser accessible
Premium support options
Flexible bill presentmentWeb-based license admin
Single tenant hostingUsage reports
Term-limited trial“Bite sized” products
Lower entry pricesChoice of payment plan
Potential Actions (Examples)
H
H
L
L
VendorRisk
Customer Benefit From SaaS
Ease of administration
Payment flexibility
Faster time to value
Less operational disruption
Easy deployment
Lower implementation risk
More accountability
Less financial risk
Incumbent
Branded
Known
Vendor Position
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 25© 2007 MarketShare, Inc 25
Potential ActionsPosition Determines Action
Mandatory dot-releases
Simplify user interface
Browser accessible
Premium support options
Flexible bill presentmentWeb-based license admin
Single tenant hostingUsage reports
Term-limited trial“Bite sized” products
Lower entry pricesChoice of payment plan
Potential Actions (Examples)
H
H
L
L
VendorRisk
Customer Benefit From SaaS
Ease of administration
Payment flexibility
Faster time to value
Less operational disruption
Easy deployment
Lower implementation risk
More accountability
Less financial risk
Incumbent
Reputable
Branded
Known
Vendor Position
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 26© 2007 MarketShare, Inc 26
Potential ActionsPosition Determines Action Areas
Mandatory dot-releases
Simplify user interface
Browser accessible
Premium support options
Flexible bill presentmentWeb-based license admin
Single tenant hostingUsage reports
Term-limited trial“Bite sized” products
Lower entry pricesChoice of payment plan
Potential Actions (Examples)
H
H
L
L
VendorRisk
Customer Benefit From SaaS
Ease of administration
Payment flexibility
Faster time to value
Less operational disruption
Easy deployment
Lower implementation risk
More accountability
Less financial risk
Incumbent
Reputable
Branded
Known
Vendor Position
Pricing &Packaging
Licensing &Billing
Product Development
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 27© 2007 MarketShare, Inc 27
Agenda
• Introduction• Long-Term Changes• Impact Assessment• Potential Actions• Wrap-Up
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 28© 2007 MarketShare, Inc 28
Wrap-UpSaaS is Part of Climate Change• Overall increases in …
> Industry maturity > Communication> Globalization> Commoditization
• Customer reacting to …> Budget pressures> ROI vs. risk> TCO vs. price
• Competitive pressures from …> Consolidation > Fewer Chasms to cross> Desperation
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 29© 2007 MarketShare, Inc 29
Wrap-UpAdapt to SaaS or Disappear• Typical responses less effective
> Technology> Features> Price cutting
• Business skills count more now> Understand and target customer need
… segment> Change the game
… new business models> Improve performance
… manage price and discounts
• Pricing models must evolve> Pay to keep Pay to use
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 30© 2007 MarketShare, Inc 30
Wrap-UpKnow Your Place
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 31© 2007 MarketShare, Inc 31
Wrap-UpFocus on Specific SaaS Benefits
SaaS FeatureCustomer Benefit From SaaS
Self-provisioningEase of administration
Price levelBilling termPayment flexibility
Simple to use, installFaster time to value
Incremental releasesLess operational disruption
AccessibilityEasy deployment
Easy to trialCustomer service orientationLower implementation risk
IT and SW in one placeMore accountability
Payments aligned with benefitsSmall packaging incrementsLess financial risk
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 32© 2007 MarketShare, Inc 32
Wrap-UpExploit Interim Tactics
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 33© 2007 MarketShare, Inc 33
Rewriting the SaaS LawsNo Need to Commit Your Soul (Commentary)
Comment I sometimes think I am living in a parallel universe when I get into conversations about Software as a Service (SaaS). People keep talking to me as if there is some kind of seismic shift taking place in the way organizations are acquiring and running software.
<snip>
So, my advice to organizations trying to figure out where SaaS fits … look at the components individually in the context of a specific requirement.
If all the elements seem relevant and attractive then SaaS is worth looking at.
If only a few have appeal, then look for the products, services and/or commercial terms that fit your requirement.
The bottom line is you don’t have to drink the Kool Aid and commit your soul to the church of SaaS in order to benefit from any of these things.
http://www.theregister.co.uk/2007/11/05/saas_freeformfynamics/
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 34© 2007 MarketShare, Inc 34
Wrap-UpBe Creative – Find a Way
Just Do It
Logo and phrase © Nike, Inc
Stay ahead of the curveStay ahead of the curve
www.SoftwarePricing.comMARKETSHARE, inc.
© 2007 MarketShare, Inc 35© 2007 MarketShare, Inc 35
Thanks!
MarketShare, Inc.508-647-0330
www.softwarepricing.com
See also: http://www.softwarepricing.com/experts/SaaS-Practice-Details.cfm