saas … challenge or huge opportunity? presented to isv convention michael ni, svp, products &...
TRANSCRIPT
SaaS …Challenge or Huge Opportunity?
Presented to ISV Convention
Michael Ni, SVP, Products & MarketingJuly 13, 2011
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What We Will Go Through TodayQuestion on How To Frame Your SaaS Decision
Facts / Figures on SaaS Market
What does it mean for ISV’s like you
Considerations when considering HOW to Transition
Customer examples, choices they made
Recommendations
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Who are you?
Physical / ESD Software PrimarilySaaS PrimarilySome of BothIn Transition
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SaaS (software as a service), has grown from a tiny sliver of the enterprise software market just a few years ago to 10 percent in 2009, according to Gartner, which predicts that slice will expand to 16 percent by 2014.-- InfoWorld
Easier and Easier to Feel Behind
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Some Even Plan Where Some Retrench In Current Business Models
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35% of ISV's are in process of trying to move to SaaS - Saugatuck Technologies
66% of ISV's will offer some portion of their application via SaaS this year – Gartner, 2011
8 out of 10 new software ventures are starting on SaaS – IDC,2012
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About half of ISV's worldwide plan to create a separate entity or BU to being the migration to Cloud and SaaS – Saugatuck Advsiors
50% of ISV's will FAIL ONCE before rolling out a successful SaaS strategy - Montclair Advisors
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2010 Applications Market 2014 Applications Market
The Shift Of Applications To SaaS & Online
Applications Market, $133B Applications Market, $167BSource: IDC WW Electronic Software Distribution, 2010-2014 Forecast, IDC WW SaaS 2010–2014 Forecast and 2010 Vendor Shares, 2010, Avangate Analysis
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Simple/Configurable Customized
SaaS
ESD / On-Premise
Both Simple and Customized Markets SaaSify
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Why SaaS? Why Now?Customers Want Low Costs, Speed, Control, Anywhere, No IT
Forrester Research, 2011
Consumers Already Used To Accessing SaaS / Cloud Services Everyday … although too often assume that it should be FREE
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Why SaaS? Why Now?Vendors
Customer’s are ready Falling concern on remote data / security / integration
Mobile / Access anywhere
Collaborate / Share
Consumerization / Non-Core to IT & Infrastructure
Simplify/Accelerate Product Evolution in fast changing markets
Benefit from scale economics in high growth markets
Disrupt markets with new entry – no implementation, HW
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In Good Company Avangate Platform Survey - Bifurcated
Source: Avangate SkyCommerce Cloud Platform Survey Data Sep-11
What % of Your Sales Are Subscription-Based?
How Are You Using Subscriptions Today?
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Random Images
Strategy
Financials
Product
Sales Comp
Question Is How To Get There …
Service
OPS
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Transition Is HardFinancial Considerations – SaaS Exacerbates Curve
•3+ years to complete SaaS conversion
•5+ years to break even
• … although can flatten the financing needs
•$35 million for successful SaaS firm before reaching an IPO
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Transition Is HardMore Than Delivery Mode … Cross-Organizational Impact
Goto MarketDeal volume (Lower GM) Acquisition / Adoption, Measureable (Cost to Acquire), Simple solutions Competitiion, Channels/ Resellers For Distribution
Sales FocusTelesales, Shorter Sales Cycles With Longer Term Contracts Paid Over Time, Compensation, Beyond The First Sale (Sell Service, Not a Product)
Product / ArchitectureScale, Integration of On-Premise / Cloud, Sensitive Data, Customization, 10%+ of Revenue
DevelopmentAcceleration of Cycles Changes Everything – Comp, Hiring, Staffing, Ecosystems no longer around 12-36 month traditional cycle
Operations / SupportMultiple Business Models, Service @ Every Touch Point, SLA’s, Expanded Support (No Longer 3rd Parties for Success), Automating Revenue Systems
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Channels Still Important … … Pressured to Consolidate
Transition Is Hard
Traditional roles of implementation lose value
… shifting to Systems Integration & education / process Expertise
Already becoming hybrids (15% self-identify as MSPs, 52% have a MSP business)
Average # of strategic partners increased from 4 (2011) to 5.8 (today)
Channel accounts for over 50% of tech industry revenue
Tech vendor Channel marketing budgets set to increase by 30% in 2012
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Starts With Defining Your StrategyConsiderations, End State, Arch Types
Traditional Hybrid Cross-Over Pure SaaS
Target Existing & new customers with on-premise only
All use on-premise & SaaS
solutions
New customers use SaaS, existing use on-premise
Newer or non-businesses, SaaS
onlyCustomization / Integration
High Partial Low for SaaS Low, Add-on’s
Vendor Driver Lock-in, high margins, Cash
Cow
Add-on revenue, competition, extend life of
current platform
Competition, new markets,
increased valuation
New markets(remove
costs, tech barriers), disruption
Market Characteristics
Mission critical, vertical,
regulated
Platform, LOB + IT buyers, bolt on
processes
SMB, limited IT / infrastructure, limited funds, cyclical, LOB
SMB, limited IT / infrastructure, limited funds, cyclical, LOB
Channel Characteristics*
Implementing and developing
solutions
Creating solution sets, responsible
for success
Aggregated demand
Aggregated demand
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3 Case StudiesJourney To Embrace New Revenue Models
Reezaa Software• Traditional, Subscription Business Model, Operational
Support Systems
Total Defense• Hybrid, New SaaS Product as Part of Total Solution
TeamLab• Pure SaaS Start-up, Spin-Out From Traditional Shareware
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Reezaa (Traditional / Shift To Subscriptions)Reezaa Media is a software development company whose flagship products include Multimedia/PDF Converters. Other products include multimedia rippers, encoders, cutters, splitters, and joiners
Reezaa is a mp3 converter Converts all formats Video and Audio to MP3, WMA, WAV, OGG, FLAC, AMR, AC3, AAC. Reezaa supports AVI, WMV, MOV, 3GP, MP4, FLV, RM, RMVB, VOB, DAT, MPEG, WAV, WMA, ASF, OGG, RA and all
DVD formats. Features include Drag-Drop Software, Convert Audio Files to MP3, Convert Video Files to MP3, Convert Youtube Videos to MP3, Change and Edit MP3 Bitrate, Rate and Audio Channel, Batch Convert Mode, and Online
Send Feedback and Questions.
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Embracing New Subscription Model … … With Traditional Download Product
• Target: Existing B2C customers
• Customization: None
• Objectives: Longer-term customer relationships, capture value of updates
• Market: low pressure for change
• Used to purchase utilities
• Virtually no costs for installation and running
• Strategy / Financial: traditional product, switch from perpetual to to subscription licensing.
• Product: No change, except providing updated versions.
• Operations / Support: Subscription billing, expanded account management, notifications
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• 11% % of Renewals of sales - Sept’10
• 24% % of Renewals of sales today (May’12)
Subscription Model Success Total Net Income Up 25% Due To 162% Increase In Renewals
+ 25%+ 12%
+ 162%
Traditional Delivery Model (ESD) still makes sense, even as customers shift from Pay Up Front to Pay As You Go models
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Total DefenseHybrid - Both Download and SaaS For Current Customers
A Global Leader In Malware Detection And Anti-Crimeware Solutions.
Over 50,000 businesses across a wide spectrum of industries have deployed the company's solutions, including some of the most
sophisticated buyers of security technology worldwide, and over four million consumers worldwide use Total Defense's products.
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Market Opportunity DrivenCloud / Mobility Creates Customer Need For SaaS Solution
• Target: Current B2B customers, future B2C
• Customization: Mixed with rules configuration for mobile solution
• Objectives: Penetrate with whole solution, block competition, extend the life of the current platform
• Market: Edge, non-core, mobile, offloading infrastructure
• Channel: Resellers play key role in education, configuration, success … distribution B2C easier
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Embracing The New ModelLessons Learned … and Still Learning Them
• Experienced Exec Team• Accelerated past dip w/ M&A
Strategy /Financial
• Sub-segmented customers• Enabled existing channels to handle / renewGoto Market
• Accelerated – rapid trials vs. IT barriers• Servicing – away from acquire & renew cycleSales Focus
• Completely different team M&A• Everything measurable – reporting ‘aaS’Product / Arch
• Worldwide SLA delivery … burning cash• Beyond transparency – proactive comm
Operations / Support
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TeamLab (Pure SaaS)A multi-function online service for business collaboration, document & project management
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Collaboration & CRM … SaaS FitFor B2B, Collaboration (& CRM) Early SaaS Adopters
• Target: B2B & prosumers
• Customization: Configuration, not customization centric
• Objectives: Enter new, high growth market in 2010 pivoting from server-based product
• Market: Low cost, rapid innovation, shared resources, social, broad access, fast implementation, low barriers for global expansion
• Channel: Distribution-centric for awareness generation
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TeamLab - Fully Embracing SaaSLessons Learned … and Still Learning Them
• Created / funded new company• Aligned for new market penetration
Strategy /Financial
• Freemium / Trial Usage Tier monetization• Shift to benefits, not techonline marketingGoto Market
• Channel / evangelist-reseller focused to gain broad awareness, acquisition, monetizationSales Focus
• 6 month prototype, rapid market iterations• Voice of the customer guidance
Product / Development
• Security / Privacy around the world• Multi-channel user feedback – user voice
Operations / Support
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Transition To SaaS#1 – Start with the End in Mind
Choose the model best fits your need
Segment your customers – one size has to fit all
Understand your costs
Shorten order to cash
Leverage other ‘aaS’
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Transition To SaaS#2 – Think Customer
Model to how customers will use your solution and then measure …
Renewals and increased usage is the lifeblood
Can package entitlements to maximize revenue
New metrics - CAC (acquisition cost), MRR, Cohort Analysis, ACV, CSR (satisfaction rate)
Customer community w/ internal customer champion
Include communication paths - notify & tell users given the constant deliveries
Service at any touch point
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Transition To SaaS#3 – Build a Lead Machine
Offer something for free - trial / test drive … one of the “magic 3” and aligned with “rapid time to value” needs
Land and Expand
Make advocates. Customers are your best salespeople - customer testimonials, ROI, metrics
Make friends. Partners for distribution, awareness, acquisition.
Put Lead Gen on Auto Pilot … low touch (online marketing, self-service, telesales), high qualification (when needed)
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Transition To SaaS#4 – Sell a Service, Not a Product
Shift your mindset - not just leaving a piece of code behind for 3rd parties to implement and make successful
Separation of Hunters from Farmers – incent on retention
Plan to deal with security & downtime - show track record
Explore SLA to address customer objections & concerns
Automate Revenue / Administration – subscriber mgmt, licensing / entitlements, billing, payments, reporting
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Transition To SaaS#5 – Drive Customer Success
Deliver programs to drive customer adoption & successFree initial training, on-going webinars, online resources, events best practice from peers.
Measure satisfaction and resolve complaints quickly
Setup self-service portals or communities to keep costs down
Consider dedicated customer success teams
Motivate customer facing employees with bonuses against customer success metrics
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Avangate B.V.Amsterdam, The NetherlandsTel: +31 20 890 8080
Avangate Inc.Redwood Shores CA., USATel: (650) 249 - 5280
Thank You.Michael NiEmail: [email protected]: @MikeNi
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Strong Team of 110+
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Avangate Clients
Software & SaaS - Security, Multimedia, Utilities… 2,300+ Companies
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Transition Is HardFinancial Considerations • Transfers costs to the
vendor
• Scaling is in step functions
• Customer knows they will pay more over the long haul …
• … pay sales on committed value, but only get paid over time
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Benefit
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Backup
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Random Images
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Random Images
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