Rod posted, in light of the recent Microsoft S+S announcements, saying that traditional sales channels may not add value to the new world of SaaS delivery.
He then turned this around to suggest that what is needed is a buyer aggregation point for SaaS vendors. Now there are two ways that Rod’s post could be taken;
That SaaS vendors should find somewhere to highlight their offerings, a virtual salesfloor if you like
That someone should provide a locale where SaaS products can be evaluated, implemented and integrated all in one place
These are two very different things. The first just brings back the inefficiencies that the current channel partners bring to software. Adding little value and being not much more than a clothes horse to hand offering on.
The second however truly adds value, it’s what salesforce.com has done via ApExchange but in a much more neutral (ie less salesforce.com centric) way. It’s iTunes for SaaS, but imagine an iTunes where you could also do a bit of dubbing, maybe a touch of Karaoke or even mash up a video to your favourite tune.
By my way of thinking it’s where SaaS needs to be if it really wants to assert it’s value proposition on the market - I’ve spoken about aggregation before - I don’t want to labour the point but just moving to an on-demand model might get the digerati excited but it doesn’t do much for joe public - what will start adding value to mass market users is the sort of aggregative model that goes way beyond just a marketplace play.
Every morning when I stop reading the last big news from about 30 blogs in Netvibes and switch to my countless SaaS Business Apps such as Gmail, Basecamp, Highrise, Remember The Milk, Google Docs, … I wonder why aggregation of information like news was present so fast in my day to day life and why Business Apps, when it comes to integration, are still in the stone age.
If I had to define the perfect Business Application, it would certainly be user-centric:
I would have a single interface where I could find all my information and processes;
The interface would be flexible. It would allow me to rearrange it the way I want: fitting my working habits and my organization of information;
And finally, it would only include the features I need and for which I would eventually pay.
Even with such powers in my hands, I would still expect quite a lot from the software provider: security, maintenance, performance, scalability and innovation.
There are obvious barriers to reach that point.
First, I doubt we will ever have some kind of a single universal DB with information about persons, friends, contacts, habits, projects, … They will probably continue to multiply and spread as new web solutions will appear.
Secondly, I doubt a single provider will ever meet all my needs. Moreover, I believe innovation comes from diversity.
So, looking at how SaaS providers are responding to this demand, we can find:
1) The me-only providers. They often provide a wonderful tool for a specific domain but are not integrated with others.
2) The API players. They believe in information aggregation and easily pass the barrier of the constantly multiplying and spreading sources of information.
Centralized and external data is combined not only to avoid redundancy for the users, but also to provide better and more complete results.
API followers would usually also provide API for their own data.
3) The SaaS Platforms. This new feature in the SaaS industry is more than probably going to be the battlefield in the in the coming months and years (McKinsey: Emerging platforms war in enterprise software).
Taking the same naming convention than McKinsey, Development Platforms and Application-led Platforms are good candidates to help the user pass the second barrier.
Providing a single interface for the users and elaborated systems for developers, this might be the solution we are looking at.
It is definitively one step further in the direction of a user-centric approach. Still, there are in my opinion certain downsides you need to consider:
First, the lock-in it creates for developers. When you choose a platform, you basically choose for a complete environment from A to Z at the disadvantage of complete freedom in innovation and technical choices.
Secondly, the real possibilities for the end users are still quite limited in terms of interface customization and flexibility.
4) True Aggregation in SaaS or the Browser as a Platform. The idea is to be able to empower the end-users and at the same time to leverage providers’ efforts and innovation without creating any lock-in.
While running their business applications through a web browser, the users can customize their screens adding or removing services offered by various providers.
Using the buzz semantic, these users are in fact running SaaS applications through a Mashup interface based on SOA architecture.
I recommend the excellent post about Enterprise Mashups written by Brian ‘Bex’ Huff.
Mashups are usually packaged by developers or Mashup specialists. But, just like Netvibes did for the RSS feeds, you could let them be created by users.
The real challenge for the software providers will then be to rethink applications in smaller blocks that could work independently AND in collaboration with other unknown services.
So we are finally seeing a move into federation in SaaS Business Applications. Aggregation of information and aggregation of features should be on the mind of everybody who plans to start a new SaaS venture.
While all-in-one heavyweight platforms such as those offered by Salesforce provide a certain comfort, I strongly believe that innovation is about freedom of choices and diversity; and it’s something that can only be achieved by embracing that diversity and not by creating lock-ins.
Last but not least, there is a last barrier that might be bigger than the two others mentioned above: the will of providers to work together and share the love!
ACCMan bought to my attention to the fact that FreeAgentCentral, the UK based SaaS accounting solution, is including tax tips into its corporate blog. As he points out this fulfills many uses;
Users get free information which they’d otherwise have to search for (read time and effort saving)
The third part contribution both build credibility and increases the feeling of community
By offering this additional information, FAC starts to become a magnet for useful stuff that’s directly related to the service offering. That increases traffic but also increases the likelihood that FAC is seen as a trusted resource.
In developing community, FAC is sparking further discussion about its service and discovering fresh requirements.
So it’s a double win - the software vendor wins credibility, design suggestions and eyeballs, while the users gain the sense of community, being listened to and a value add.
I had an email from a SaaS startup the other day that asked me to explain what I meant when I said that “SaaS businesses need to think about aggregation”. My response to him went thus;
in this environment, where there are lots of “me too” offerings, I really like SaaS platform plays. This is where a product takes in information from many different sources and puts it in one place where it is easy for the user. Examples could include - Salesforce with Google apps, Zoho allowing login with Google login, FreeAgentCentral giving free tax tips on its blog - it’s all about letting people come in to share So aggregation can be;
single sign-on
APIs
true aggregation (multiple data streams on one locale)
Good on FAC for seeing where this is heading - what will be the next aggregation play?
Awesome to see that, fresh after the British Telecom move into creating a SaaS aggregation platform, Telstra has done similarly for Australia. The idea is that the platform will include applications from the major international players as well as offerings from smaller local companies.
Telstra is targeting SMEs with the platform. The move is a double win for SaaS;
It introduces SaaS to businesses that otherwise would not utilise it. Telcos already have eyeballs, those eyeballs will now be exposed to SaaS
It allows new local entrants to get a step up, helped by both the credibility and exposure of the telco, but also from the credibility of the larger SaaS companies taking part in the platforms
This is a logical move for a Telco - they’re generally not nimble enough to create their own SaaS offerings, but what they arguably do execute well is large scale technology platforms. These sorts of SaaS aggregation locations are a natural fit for a Telco’s core competencies.
What will be really interesting will be to see how much vendors sitting on these platforms sell in comparison to their more direct sales. Is the increased turnover and exposure that comes from these moves worth the hit in margin that these deals invariably cost? Or put another way, how does the cost of direct sales compare to the revenue cost through being a part of these platforms?
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