Thursday, May 21, 2009

SaaS Forum: Competing in a SaaS World, Summary by Patricia Meisner

Both the Sales and Marketing tracks and roundtables were standing room only substantiating the growing interest in SaaS business models. In fact when Michael Basch of Salesforce.com presented “SaaS 101” (or the “difference between owning and living in a house vs a condo complex”) to the Sales Track audience, more than 75% of the attendees responded with a show of hands that they were involved with SaaS companies-- suggesting it has become downright mainstream. Michael's Presentation

When Teanna Spence of Makana Solutions spoke about effective sales compensation structures for SaaS models she had numerous questions from the audience-- mostly about the timing of payment of commissions. She offered several key strategies for structuring a SaaS model:
- Put most of the emphasis on where you want sales focused- is it booking to build installed base, or is up-sell and follow-on revenue more important?
- Model the costs associated with any commission plan and be sure you can afford it, especially given the nature of the SaaS revenue stream.
- Communicate performance alongside the commission statement of earnings so reps understand their accountability for success in a SaaS business model.
Teanna's Presentation

Colleen Smith, VP of SaaS for Progress Software did an excellent job of moderating the roundtable discussion. All panelists agreed that the sales cycle for SaaS is lengthening , with the customer doing greater diligence and looking for proof points as well as expecting to realize an ROI in less than 12 months. One panelist added that the customer is dismissive of the soft costs that go away with SaaS (big part of the value prop) and that one cannot do "spreadsheet model selling". All agreed that the sales engineer still plays a large role in SaaS selling because the need to identify the customer problem does not go away.

In the end I came to the conclusion that the differences in selling SaaS versus on-premise solutions are more a function of the size of the target customer. The fact that enterprise level capabilities can be delivered to mid-market customers in more affordable SaaS platforms requires that solution providers map their sales activities to the buying characteristics of their target. The SaaS forum highlighted many areas in both sales and marketing tracks that are worth further drill down in future programs.”

Post contributed by: Patricia Meisner, MassTLC SaaS Cluster co-chair

Join MassTLC's Software as a Service cluster community for the SaaS Summit follow-up event: SaaS Breakfast Seminar: Increasing Renewal Rates to Maximize your Company’s Growth and Success, on June 23rd at IBM in Waltham.

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