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The Top Ten Dos and Doníts of SaaS Business Success
Henry Ford once said: ďAny customer can have a car painted any color that he wants so long as it is black.Ē Then, in 1923 Alfred Sloan of General Motors came along changed the rules of the game by offering a tremendous variety of colors and models. Because, it turns out that even the most apparently uniform markets have customers with unique requirements. But, GM didnít do it one customer at a time. GM redesigned its manufacturing line with the required flexibility to produce a multitude of models and colors without compromising the inherent economies of scale of Fordís assembly line innovationóa practice that has evolved into the modern concepts of flexible manufacturing and mass customization.
The primary enabler of mass customization is the elimination of setup costs. Setup costs occur from the labor, time and tooling it takes to switch a production line from one product to the other. High setup costs encourage long production runs to cover the expense incurred in switching over. By reducing them, production runs can be shortened. If set up costs are completely eliminated, production runs can be reduced to a single unit. That I, you can make the variations A, A1, A2, Ö AN of a product (GM colors and models) for the same costs as making N units of A (Ford Model Ts). If you apply this idea to enterprise software, taking each customer installation as a unit and the associated, customer-specific implementation, configuration, customization, and ongoing maintenance time and effort as the setup costs, then the roadblocks to mass customization in SaaS become clear: eliminate, automate and generally squeeze the cost out of your ability to handle unique customer requirements without compromising your fundamental cost advantage.
Your customers will have unique requirements. This is a fact. This business need implies an architectural requirement that is as essential to software-as-a-service business success as system security and a scalable, single-instance, multi-tenant design. It requires automated deployment that consumes minimal resources, extensive, easy-to-use, self-service configuration and complete interoperability built on open, standards-based APIs. It cannot be off-loaded to VARS or customers. This shifts the costs downstream and undermines competitive advantage, because from the customerís perspective, total cost of ownership is not reduced relative to installed software.