According to Gartner, Inc. the worldwide cloud services market will total more than $246.8 billion by the end of 2017, an impressive 18 percent growth over the previous year. Software as a service (SaaS) is defined as a subscription software licensing delivery model which is centrally hosted and accessed in the virtual cloud by subscribers over a web browser. SaaS has become a common delivery model for many business operations applications that were once purchased and maintained by an organizations internal IT department. Today, SaaS has been incorporated into the strategy of nearly all leading enterprise software companies and has a significant profit potential for cloud providers. For software consumers, SaaS may offer a high value alternative to infrastructure systems. The growth in the SaaS business model has new providers eager to enter the marketplace.
Before entering the market eager entrants need to be aware of some of the challenges to successfully launching a SaaS portfolio including sales techniques, financial issues, technical considerations, cyber security and customer expectations. And while SaaS can benefit enterprise users by freeing up resources currently dedicated to in house IT systems, the transition to the cloud may cause serious integration issues. Just like all new ventures success often depends more on the preparation phase rather than the launch. Formulating the right idea to fill a real need is critical. Whether starting anew, forming a “White Label Partnership”, joining in an existing franchise or investing in an up and coming SaaS organization attracting the right technical talent and qualified management partners is critical.
For even the best prepared and most talented managers, starting a new SaaS business is no easy endeavor. As with any new business, personal intuition and great plans may look good on paper but more often than not can be out of sync with what the customer has in mind. Keeping the initial offerings targeted to providing simple solutions and unencumbered with unnecessary bells and whistles will enable new clients to understand the benefits of the service and implement the transition successfully. Focusing on serving initial customers with exceptional service will build a foundation for future success and growth.
“We are working with many SaaS businesses that are not just launching software but developing a sustainable business model,” comments Julie Gareleck, Managing Partner, Junction Creative Solutions (Junction). “Our main focus with these companies is to clearly define how the software can be monetized by focusing a one-to-many approach. For many in the industry, building the platform is top priority and making money is a secondary focus. Our approach with clients has proven to be successful and it’s exciting to watch these companies gain market share in competitive industries.”
For more information on what it takes to build a successful SaaS business model, click.