Thursday, June 19, 2008

Riches for SaaS providers

Many consultancy business are built upon serving the need for comparitive benchmarking of business operations. Ranging from strategy and efficiency, to more detailed metrics such as employee retention and productivity. Most of these consultancies use old-fashioned surveys and questionaires to gather this data which of course is fraught with data quality issues. Well, no more! There is a better way and it is through SaaS providers.

To generate the necessary economies of scale, SaaS is by necessity multi-tenant. Secondly, the dynamics of business haven't changed so SaaS providers need to race to critical mass in terms of installed customer base to continue to be relevant and generate free cash flow to drive continued innovation and roll out new functionality. Only the largest SaaS providers in a vertical will survive.

This creates the next monetization option for SaaS providers: business intelligence and benchmarking. The SaaS provider has brought together a wealth of companies all using the same business process codified in the SaaS functionality. Mining this data for trends and operational business metrics is just a small step. Global competition forced big companies to develop these business intelligence processes and they had the operational scale necessary. Small and medium business operation had to be aggregated to be able to generate this opportunity and this will be many times over more valuable than the SaaS functionality that the SaaS provider started with.

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