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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Software-as-a-Service Success

The Top Ten Dos and Doníts of SaaS Business Success

The Dos: Ten Proven Strategies for Software-as-a-Service Businesses

SaaS Do #6 Reach across the Firewall

Anyone old enough to remember the reengineering craze of the early nineties may recall that this was a monumental shift in thinking about how to apply new technology to business centered on redesigning business processes for order-of-magnitude gains in productivity. The basic ideas were codified in the book: Reengineering the Corporation by Michael Hammer and James Champy. Brainstorming and out-of-the-box thinking were the order of the day, because creativity was the key ingredient to realizing the potential gains. However, creativity has not been the mantra of the SaaS revolution, the mantra of SaaS has been lowering TCO (total cost of ownership). Basically, take what is already done, make it multi-tenant, deliver it over the Web, aggregate customers and offer it for less. While this is a great business proposition for customers, it places SaaS vendors squarely into highly-competitive, price-sensitive commodity markets.

If you want to differentiate your offering, you must look beyond the client-server application that you are replacing and enable order of magnitude productivity gains in core business processes by connecting your SaaS offering to the rest of the Web. These opportunities tend to arise less from internal processes (the traditional realm of enterprise software), than they do from internal-external and purely-external processes. While 90ís style reengineering was about employee productivity gains, SaaS and cloud-based reengineering will center on order of magnitude productivity gains in prospect, customer, partner, community, and computer-to-computer interaction derived from integration, network effects, user-generated content, and on-demand processing and data.

The poster child for this concept is Google AdWords, easily the most successful B2B application on the Web. Google AdWords is rarely classified as a software-as-a-service, because it doesnít look like a traditional enterprise client-server application, such as CRM or ERP. However, it completely revolutionized the core business process of demand generation for many companies by reaching across the firewall. In this sense, it is no different from an on-demand email marketing tool, which most people have no difficulty labeling as SaaS.

If you think outside-the-box, or rather outside-the-firewall, do you see opportunities to reach out across the Web to your prospects, your customers, your customersí prospects, your partners and your partnersí customers? Can you envision entirely new killer applications that completely redesign a core business process for order-of-magnitude gains in productivity? If you can, then you have taken the first step toward breaking out of the mainstream SaaS hard life of low cost-based competition to the Web world of innovation, differentiation and competitive advantage.

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