Friday, May 22, 2009

SaaS Forum: Competing in a SaaS World

During the SaaS Forum on May 21st, Tod Loofbourrow, co-founder of Authoria, gave a terrific keynote to open the forum "Competing in a SaaS World -- Overcoming the Challenges to Deliver Successful Sales and Marketing Results." Tod spoke about the tricky nature of SaaS because of the cost structure and cash flow timing. The financial measures that are absolutely critical to watch include customer acquisition costs, gross margin per customer, lifetime value per customer, annual contract value per customer and churn (a measure of customer retention).He indicated that reaching 90% renewal rate is very good, and less that 85% requires work. The group then split into two tracks; marketing and sales.

I [Jim Geisman] followed the marketing track and heard Nancie Freitas, VPM of Constant Contact, speak on how customer-centric focus is essential. The customer centric focus starts at the top and can be reinforced by training and incentives. Imperative to the approach is listening to customers' wants. Ideally you should be implementing these wants in frequent new releases (Constant Contact does 6 new releases per year). By watching and tracking customers' behavior and use of features, you will be enabled to eliminate features that detract and add features that delight. A proactive outreach approach is also very important; by helping customers be successful with their initial use of the product you will be converting more trials to subscriptions. View Nancy's Presentation

Brian Zanghi, CEO at Kadient, spoke about taking customers through the transition from a perpetual license hosted on-premise to a subscription license delivered via SaaS. In order to retain customers this transition needs to be managed very carefully. Coordination between sales and marketing is imperative during this process. The sales pitch must be tailored by closely watching the behavior of the prospect. "Sales compensation is the key issue here; reward the behavior you want. Sales folks are coin operated."
View Brian's Presentation

The presentations were followed by a roundtable discussion. A lot of knowledge was shared during this roundtable discussion about the impact of SaaS on marketing and sales. Many agreed that there is a strong link needed between these two groups. It is important to always remember that a lead isn't a lead until it is accepted by sales.

In regards to the SaaS marketing... traditional marcom marketers do not have the right skill sets, they are too focused on print and tradeshows. Direct marketers have a more suitable skill set. Always keep in mind such tools as RSS, Twitter and blogs as tools to attract customers and influencer visibility.

In regards to SaaS sales... free trials need to be long enough to use the customer's data to prove the application value. Some applications simply are not "trial-able."

My closing thought is to remember useful tools are SEO like Hubspot and Google analytics and Lead qualification like Vtrenz/SilverPop; useless activities include renting lists, print ads, general tradeshows, and tchotchkes.

Post contributed by Jim Geisman, MassTLC SaaS Cluster co-chair; Software Pricing Partners

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.

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.

Thursday, May 14, 2009

Update on the IT Collaborative

Pat Larkin invited Council leaders back for another update on activities of the IT Collaborative (See PPT overview linked in my prior post). Councils represented at this meeting include MassTLC, MassNetComms, and MITX. Pat indicated that the Organizing Committee decided to host an event in June focused upon two main goals:
1. to share the progress of the working groups to date with a broader audience
2. to widen the circle of participation.

He indicated that the co-chairs of three working groups are finalizing program descriptions for community dialogues in the following policy areas:
1. new venture formation,
2. talent initiatives, and
3. a session to continue fine-tuning the identity of the Massachusetts IT sector.

Pat shared the program design with us and invited input on how the Organizing Committee is planning to leverage the Internet to advance the emerging objectives of the Collaborative. He ended the meeting with some thoughts on how to measure success of the IT Collaborative. He noted that we will have succeeded when “Massachusetts” is one of the top three answers to this question: “When you think of IT, what part of the globe do you think of?”

Tuesday, May 5, 2009

Stimulus Funding Opportunities Uncovered

Over 100 executives turned out this morning to explore stimulus opportunities that the American Recovery and Reinvestment Act will create for technology companies in Massachusetts. The speakers covered a broad range of opportunities ranging from broadband and ehealth to smart grid and life sciences. In addition to direct grant opportunities the panel pointed to secondary opportunities resulting from, for example, hospitals who receive funding but need to hire technology solution vendors as part of their stimulus grant.


Jeffrey Simon (Jeffrey.Simon@state.ma.us), Director of Infrastructure Investment, Commonwealth of Massachusetts (Pictured here) kicked off the program with a keynote address on Allocating Stimulus Funding in Massachusetts (View PPT).

Next, Pat Larkin (larkin@masstech.org), Director, MTC's John Adams Innovation Institute moderated a panel including:

Event details and attendees here.