SaaS strategies for packaged software vendors
Before non-IT readers turn away, this isn’t an article on only Software-as-a-Service (SaaS) per se, but also general product portfolio strategy.
Packaged software vendors are often greeted with howls of derision (usually from SaaS proponents) when they announce that they are going to produce an online service version of their product. While some will undoubtedly botch the move, I wouldn’t be so quick to dismiss their intentions. There are an awful lot of well-managed, well-funded, successful package vendors with proven products getting ready to compete with poorly-funded, under-managed SaaS start-ups. Some in either camp won’t succeed, but some will produce winners, marketed and delivered superbly.
As with any product management strategy, you need to have a clear understanding of what you are trying to achieve when you introduce product variants. Sinclair Schuller (from SaaS platform vendor Apprenda) has written a thoughtful piece on SaaS strategy considerations for package software vendors (click here for a summary). It’s worth reading the whole article, but in a nutshell, he looks at four quite different strategic intents:
- full product replacement
- complementary offering
- “lite” version
- new product.
It’s important to know which strategy you’re pursuing and why, so you can manage the risks as well as the opportunities. Whether you’re in the software business, the hotel business or the wine business, your product strategy needs to have been put through a similar analysis, remembering that the implications of the options may be quite different in your industry.
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August 29th, 2007 at 8:49 am
Methinks we subscribe to the same RSS feeds Jim!
August 29th, 2007 at 9:05 am
Jim, your comment that “…successful package vendors with proven products [are] getting ready to compete with poorly-funded, under-managed SaaS start-ups…” is the most important takeaway. While SaaS startups have some advantage, people would be naïve to think that mature ISVs (public or private) will laydown their swords without some sort of fight. Strategy is simply an implementation of that fight.
August 29th, 2007 at 2:19 pm
Jim, your click the chart link doesn’t work, unless you mean’t click the word chart as opposed to click the chart image.
August 29th, 2007 at 2:44 pm
Sorry - I meant click on the word. Should be clearer now
August 29th, 2007 at 4:09 pm
OK, so it was usability issue not a technology issue. I thought it might be an open source problem.
August 29th, 2007 at 4:19 pm
August 29th, 2007 at 5:32 pm
Jim, SaaS sounds technical. I wonder whether senior managers are turned off. Isn’t it about time a business-oriented name/description and value proposition was developed, so that senior executives could see and assess the proposition rather than simply delegating it to the CIO and below as “a technology”???
August 30th, 2007 at 11:37 am
Peter is right - SaaS hwoever is simple to explain to a board - solving the particular user/organisation problem pure and simple.
Throw out the technical issues, forget systems administrators, it’s about developing tools with a 100% user-centric viewpoint.
SaaS is uite simply a problem simplfying and solving tool
August 30th, 2007 at 4:54 pm
I thought ASP worked as a name, but apparently that was hijacked by outsourced infrastructure vendors running single client apps which you had to license yourself anyway, which rather defeated the purpose.
However, it’s not that hard for CxO’s to understand. We’re reasonably bright people - usually - so I wouldn’t worry too much. And for enterprise customers, it’s the CIO’s job to figure out the delivery mechanism.
August 30th, 2007 at 6:14 pm
If you think SaaS is too difficult for people to understand you could use the words “On Demand”
September 4th, 2007 at 11:07 pm
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September 20th, 2007 at 1:19 pm
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