Tuesday, September 15, 2009

'5 Tips to SaaS Success' - Lets Add One More

A good article here by Cam Wayland on CRN. She asks why resellers are finding it hard to move to SaaS - and suggests that it's because of the lower revenue stream that SaaS generates when compared to Client-Server, Open Client model applications.

After doing the maths, she concludes that; "It would take six months for the reseller to make the same profit from selling a SaaS solution compared to a "traditional" software or hardware or solution."

But according to Cam, it's not all bad news. Resellers have to consider the fact that SaaS commissions are generally earned in one go, whereas traditional software commissions, while bigger, are often spread over monthly payments.

However, in her opinion "it will take 12-18 months of steady building of the annuity base before the full financial benefits are realised."

In other words, while the SaaS model is better for your long term business, it takes time before you start seeing comparable levels of revenue that you may have been used to with your traditional software sales.

The answer is simple then - Don't give up you're traditional software licence sales! Keep them going AT THE SAME TIME as offering a SaaS model. This way you keep your high revenue streams while developing your SaaS customer base.

While Cam offers 5 tips to SaaS success at the end of her article, I would therefore respectfully add a sixth: get an application platform that allows you to deploy both traditional Client/Server apps AND SaaS from the same code-base - and for the same single development effort.

We've spoken about this extensively here.