Compasssaasindustryreview2014

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State of SaaS

18 February 2014

Bjoern Lasse Herrmann Small Business Summit

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Good news

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First successful SaaS Players

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The combination of SaaS, cloud services and mobile “has the

potential to topple nearly every major enterprise software incumbent.”

- Scott White, Andreesen Horowitz

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Easier than ever to launch a great SaaS product

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A lot of funding is pumped into Saas

Nearly half of SaaS startups are funded

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The SaaS market is growing 3x faster than software

7% Software

18% Cloud

20% SaaS

Source: Gartner, 2013 !

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Growth will continue throughout the decade

20% growth forecast through 2020

Source: Gartner, 2013 !

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Global markets

$10B N. America

$3.5B Europe $1B

Asia

Source: Gartner, 2013 !

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Salesforce is a shining star +30% growth in 10 of the last 12 quarters

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But

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The SaaS pool is still very small

Less than 6% of the overall software market

$2,700B IT

$326B Software

$131B Cloud

$17B SaaS

Source: Gartner, 2013 !

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Everyone wants in

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Saas is very Competitive

Half of SaaS startups either are choose growth over profitability

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The SMB market is fragmented

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And crowded with competitors

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Scale is hard to achieve

Less than 7% achieve 10k users

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Distribution is the #1 challenge No existing distribution ecosystems

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Companies rely on direct sales

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With small sales teams

Only the largest companies have teams

of 5+

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And without marketing funds

Only the largest companies pay for advertising

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So companies fight for turf

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And push from SMB into lucrative

enterprise markets

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Aiming to join the SaaS leaders But is this really the competition?

$20-25B market cap $5-20B market cap $1-5B market cap

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This is who really dominates Most SaaS revenue comes from industry titans

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This is David versus Goliath Except the David’s are fighting each other

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Why do Goliath’s dominate?

They may not be as nimble, but they have the support of a whole distribution ecosystem

Technology

Resellers Channel partners

Consultants Licensed trainers

System integrators

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Enterprises have deep needs SMBs change software after reading a blog post Enterprises require a change management plan

Integration Security Training

Data portability Long-term

viability

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The best product does not win The best distribution does

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So how can the Davids beat the Goliaths?

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Start with the right segment CRM is fastest growing enterprise market

SaaS still only 40%

Source: Gartner, 2013 !

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Start with the right technology

Mobile is new for Goliaths

Web is accessed

27% more on mobile than PC

Source: Gartner, 2013 !

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Start with the right channel Partners are 10x less expensive than other channels

Strength in numbers

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Cross-sell Not just for additional revenue

But to build distribution networks

Consultants

Licensed trainers

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Scale fast, build a platform Worry less about product, more about distribution

3rd party APIs stabilize and feed Salesforce

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Band together Channel partners increase distribution

Stability & portability increase attractiveness to enterprise buyers

Consultants

Saas Companies

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Alone The Davids have a hard time to Compete

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Together they can win

Consultants

Saas Companies

[email protected]!