Top Ten Dos and Don'ts of SaaS

Build a successful software-as-a-service business

Copyright 2009 by Joel York at Chaotic Flow.

saas top ten dos and don'ts

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The Top Ten Dos of SaaS Success

SaaS Do #1 - Choose a Large Market

SaaS Do #2 - Create a Hub on the Web

SaaS Do #3 - Accelerate Organic Growth

SaaS Do #4 - Craft a Compelling Story

SaaS Do #5 - Build the Business into the Product

SaaS Do #6 - Reach across the Firewall

SaaS Do #7 - Monetize Creatively

SaaS Do #8 - Enable Mass Customization

SaaS Do #9 - Open Up to the Cloud

SaaS Do #10 - Leverage Your Community

The Top Ten Surefire Ways to Fail at SaaS

SaaS Don't #1 - Chase Elephants

SaaS Don't #2 - Waste Money Marketing Offline

SaaS Don't #3 - Launch without Online Trial

SaaS Don't #4 - Cover up Shortcomings with People

SaaS Don't #5 - Invest in Channel Partners too Early

SaaS Don't #6 - Bleed Cash Indefinitely

SaaS Don't #7 - Ignore the Long Tail

SaaS Don't #8 - Think You Can Control It

SaaS Don't #9 - Fail to be Creative

SaaS Don't #10 - Depend on Network Effects

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SaaS Do #8 Enable Mass Customization

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.

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