Sunday, July 20, 2008

SaaS business development

There is a great group discussion regarding cloud computing at Google Groups. In one thread titled Brutal reality of SaaS... I came across a new term for me: "adoption-led market".

Traditionally, the software acquisition process involves RFPs from vendors that are then run through some evaluation process leading to an acquisition. Money changes hands, and at that point, the business adoption starts. Software selection in this procurement-driven market is a matter of faith.

The open source community had to resort to a different approach. Simon Phipp's dubbed this the adoption-led market. The basic dynamic here is that developers try out different packages, often open source, to construct prototypes with the goal to create a deployable solution to their business problem.

It is clear that availability of open source solutions had to cross a certain critical mass of functionality and reliability before this market could develop. The LAMP stack was the first reliable infrastructure that was able to deploy business solutions, but now we have a great proliferation of functional augmentation to this stack that accelerates this adoption-led market.

Simon concludes in his blog entry:

Written down like that, it seems pretty obvious, but having a name for it – an adoption-led market – has really helped pull together explanations and guide strategy. For example:

  • In a procurement-driven market you need to go out and sell and have staff to handle the sales process, but in an adoption-led market you need to participate in communities so you can help users become customers.

  • In a procurement-led market you need shiny features and great demos, whereas in an adoption-led market you need software that is alive, evolving and responsive to feedback.

  • In an adoption-led market you need support for older hardware and platforms because adopters will use what works on what they already have.

  • Adoption-led users self-support in the community until they deploy (and maybe afterwards if the project is still “beta”) so withholding all support as a paid service can be counter-productive.

To me the change from a faith based procurement process to a more agile functionality driven approach is at the basis of SaaS attractiveness. A small business can do an evaluation in 15 minutes and get a sense if the software is going to solve a problem. The on-demand test drive facility to me is the great break through and I find myself looking for that facility in all software evaluations now.

Observing my own behavior, building a SaaS business centers on this adoption-led approach. A potential client is looking for an easy to use trail capability either as an open source package like MySQL or as a trail test drive like Bungee. Ease-of-use is the differentiator here since most evaluations would be opportunistic: if you can't impress your customer in the time it takes to drink a cup of coffee you may have lost that customer for ever.

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