THE ROAD TO “SAAS-IFICATION” FOR SOFTWARE VENDORS #shifttosa as Brian K. Walker Principal Analyst Forrester Research @bkwalker www.forrester.com Craig Vodnik VP of Marketing cleverbridge @craigvodnik www.cleverbridge.com Questions? @cleverbridge
Jan 20, 2015
THE ROAD TO “SAAS-IFICATION” FOR SOFTWARE VENDORS
#shifttosaas
Brian K. WalkerPrincipal AnalystForrester [email protected]
Craig VodnikVP of [email protected]
Questions? @cleverbridge
THE ROAD TO “SAAS-IFICATION” FOR SOFTWARE VENDORS
About cleverbridgecleverbridge is a full-service e-commerce partner for companies that sell digital products. Our flexible platform and unrivaled service fuel the performance of B2C and B2B businesses around the globe.
Drawing from years of experience and expertise, cleverbridge provides a customized, multi-channel e-business solution.
International corporations like Avira, GFI, Ipswitch and Quest Software count on cleverbridge to support their SaaS and subscription-based e-commerce needs.
#shifttosaas
THE ROAD TO “SAAS-IFICATION” FOR SOFTWARE VENDORS
#shifttosaas
Brian K. WalkerPrincipal AnalystForrester [email protected]
Craig VodnikVP of [email protected]
Questions? @cleverbridge
© 2010 Forrester Research, Inc. Reproduction Prohibited4 © 2009 Forrester Research, Inc. Reproduction Prohibited
The Road To “Saas-ification” For Software Vendors
Brian Walker
Vice President & Principle Analyst, Forrester Research
July 13, 2011
@bkwalker
© 2010 Forrester Research, Inc. Reproduction Prohibited5
© 2010 Forrester Research, Inc. Reproduction Prohibited6
Buyers are serious about adopting SaaS software, but why?
© 2010 Forrester Research, Inc. Reproduction Prohibited7
Today, 31% of companies are already moderate or heavy users of SaaS software
“Which of the following best describes your company's usage and adoption of SaaS software?"
All of the software our employees use is SaaS based
Most of the software/applications our employee's use are SaaS based; a minority is desktop or internally deployed web apps
We have a mix of SaaS based applications and traditional desktop software/internally hosted web applications
We use a few SaaS applications, but the majority is traditional installed or internally hosted web apps
We don’t use any SaaS software
0%
6%
19%
18%
57%
4%
8%
24%
33%
32%
500 - 9,999 Employees (n=85)
20 - 499 Employees (n=72)
Base: US and EU software purchase decision makers for companies of each size
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
© 2010 Forrester Research, Inc. Reproduction Prohibited8
TCO is a key driver of the adoption of SaaS software by enterprise companies
Support regulatory requirements
Support our company's sustainability goals (e.g., green IT, supply chain CO2 reduction, occupational health)
Increase innovation
Improve integration between applications
Support company growth
Be more nimble as the firm changes business processes
Improve collaboration and information exchange (e.g., Web 2.0, portals, workspaces)
Improve business process execution speed
Data security
Reduce costs
0% 10% 20% 30% 40% 50% 60% 70%
1%
4%
3%
16%
6%
17%
12%
12%
27%
7%
6%
4%
9%
9%
9%
9%
13%
12%
15%
3%
10%
12%
4%
16%
9%
11%
18%
13%
Ranked 1 Ranked 2 Ranked 3
“What would you say are the top business goals your internal IT organization considers when choosing SaaS software? Please rank up to 3, in order of importance”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: 89 US and EU software purchase decision makers at organizations using SaaS software
© 2010 Forrester Research, Inc. Reproduction Prohibited9
SaaS removes the risk of getting “orphaned” on an old or unsupported version of a software platform
SaaS software vendors offer superior customer service and support than vendors selling up-front licensed software
SaaS software is more reliable than internally hosted software/applications
My company has a preference for SaaS software as it allows our employees to access application(s) from any PC / laptop, anywhere
SaaS software has a better 3 year TCO than traditional CPU or license based software
My company's data is at least as secure when using SaaS software as internally hosted software
Acquiring and implementing SaaS software is faster than internally hosted software
Using SaaS software, I am confident that my data is/would be securely backed up on a regular basis
Using SaaS software enables companies to roll out new products to our employees without incurring large upfront acquisition costs
When using SaaS software, my company owns/would own our data
SaaS software enables companies to stay on an up-to-date version easier than internally hosted software
0% 25% 50% 75%
22%
18%
16%
24%
31%
28%
34%
27%
38%
10%
15%
22%
15%
15%
18%
22%
24%
38%
31%
4 Strongly agree - 5
“To what extent do you agree or disagree with the following statements about SaaS?” Rate on a scale of 1-5 where 1=“Completely disagree” and 5=“Completely agree”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: 157 US and EU software purchase decision makers
© 2010 Forrester Research, Inc. Reproduction Prohibited10
And acquiring and implementing SaaS software is faster than on‐premise software
It was the only deployment option available from software providers
We have a general IT strategy of preferring SaaS over on-premise deployments
Gaining a feature or functionality that is not available in a traditional, licensed software package
Ability to substitute upfront costs with regular monthly payments
We chose the best application for our needs, and were neutral on whether it was SaaS or not
Lack of in-house IT staff to maintain a traditional software solution
To support a large number of mobile and remote users
Speed of implementation and deployment
Lower overall costs
0.0561797752808987
0.0449438202247191
0.134831460674157
0.112359550561798
0.112359550561798
0.101123595505618
0.134831460674157
0.101123595505618
4%
6%
6%
10%
12%
10%
19%
30%
6%
3%
8%
7%
12%
17%
21%
17%
Ranked 1 Ranked 2 Ranked 3
In general, what would you say were the top drivers in your firm’s decision to adopt software-as-a-service (SaaS)? Please rank up to 3 drivers, in order of importance.”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: 89 US and EU software purchase decision makers at organizations using SaaS software
© 2010 Forrester Research, Inc. Reproduction Prohibited11
SaaS Is The Holy Grail For Software VendorsSoftware marketers are increasingly turning to SaaS as a faster, less expensive, and less resource intensive way to deploy business solutions for their customers.
© 2010 Forrester Research, Inc. Reproduction Prohibited12
SaaS opens the door to new markets, especially SMB
© 2010 Forrester Research, Inc. Reproduction Prohibited13
The application was adopted company-wide as part of a formal RFP process
The company switched from a internally hosted/packaged product to an equivalent SaaS product from the same vendor
The application was initially used by a functional department, without IT approval and subsequently grew in popularity until IT adopted it as a companywide application
The application was initially used by a functional department, without IT approval and subsequently grew in popularity but is not a formally IT approved company application
32%
39%
19%
3%
47%
16%
24%
7%
500 - 9,999 Employees (n=58)
20-499 Employees (n=31)
And provides a way to retain existing customers during software replatforming and cost-saving projects
“Thinking about a recent SaaS application that has been adopted within your organization, which of the following best describes the purchase process.”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: US and EU software purchase decision makers for companies of each size using SaaS software
© 2010 Forrester Research, Inc. Reproduction Prohibited14
SaaS provides very healthy margins
“The beautiful part of SaaS based products is once you have the structure and delivery
set up, your investment is sunk and everything you are receiving off the top is pretty high margin. You have to invest in
the security, performance, bandwidth, etc. but now that we have that, we create greater and greater margin the more
customers we bring on. The level of margin is almost embarrassing, its so high, so I
don’t want to divulge.“
Director of Marketing Provider of software solutions to health ins. industry
© 2010 Forrester Research, Inc. Reproduction Prohibited15
Onboarding new customers is significantly easier
SaaS software vendors offer superior customer service and support than vendors selling up-front licensed software
SaaS software is more reliable than internally hosted software/applications
My company has a preference for SaaS software as it allows our employees to access application(s) from any PC / laptop, anywhere
SaaS software has a better 3 year TCO than traditional CPU or license based software
My company's data is at least as secure when using SaaS software as internally hosted software
Acquiring and implementing SaaS software is faster than internally hosted software
Using SaaS software, I am confident that my data is/would be securely backed up on a regular basis
Using SaaS software enables companies to roll out new products to our employees without incurring large upfront acquisition costs
When using SaaS software, my company owns/would own our data
SaaS software enables companies to stay on an up-to-date version easier than internally hosted software
0% 25% 50% 75%
22%
18%
16%
24%
31%
28%
34%
27%
38%
10%
15%
22%
15%
15%
18%
22%
24%
38%
31%
4 Strongly agree - 5
“To what extent do you agree or disagree with the following statements about SaaS?” Rate on a scale of 1-5 where 1=“Completely disagree” and 5=“Completely agree”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: 157 US and EU software purchase decision makers
© 2010 Forrester Research, Inc. Reproduction Prohibited16
Trials are as easier to offer and simple to covert
© 2010 Forrester Research, Inc. Reproduction Prohibited17
Additional services and seats are easier to up-sell
“It’s a bit like a Trojan horse. The customer starts small, and then adds more and more bits that we can provide.”
Director, product manager, provider of publishing services solutions
© 2010 Forrester Research, Inc. Reproduction Prohibited18
Vendors can react quickly to changing market requirements and innovate at a rapid pace
Support regulatory requirements
Support our company's sustainability goals (e.g., green IT, supply chain CO2 reduction, occupational health)
Increase innovation
Improve integration between applications
Support company growth
Be more nimble as the firm changes business processes
Improve collaboration and information exchange (e.g., Web 2.0, portals, workspaces)
Improve business process execution speed
Data security
Reduce costs
-10% 0% 10% 20% 30% 40% 50% 60% 70%
1%
4%
3%
16%
6%
17%
12%
12%
27%
7%
6%
4%
9%
9%
9%
9%
13%
12%
15%
3%
10%
12%
4%
16%
9%
11%
18%
13%
Ranked 1 Ranked 2 Ranked 3
“What would you say are the top business goals your internal IT organization considers when choosing SaaS software? Please rank up to 3, in order of importance”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: 89 US and EU software purchase decision makers at organizations using SaaS software
© 2010 Forrester Research, Inc. Reproduction Prohibited19
SaaS is not always a silver bullet. Limitations and challenges for adoption still exist at many enterprises and government organizations.
© 2010 Forrester Research, Inc. Reproduction Prohibited20
Few SaaS products gain enterprise wide adoption without the support of IT. IT still holds a veto
“Regardless of current adoption, when purchasing SaaS software, which, if any, of the following approvals does or would your organization typically require?”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
CSO (Chief Security Officer) (e.g. required audit on the SaaS vendors security compliance)
Legal (e.g. required to see that company SLA's are covered in the contract with the SaaS vendor)
Corporate finance (e.g. required to see that the TCO competes competitively with traditional licensed software)
IT (e.g. required review to prove that the SaaS vendor's application meets required integration needs)
32%
41%
67%
76%
34%
40%
57%
90%
IT Buyers (n=91)
Business Buyers (n=66)
Base: US and EU software purchase decision makers in each role
© 2010 Forrester Research, Inc. Reproduction Prohibited21
Security concerns with SaaS are widespread
Security concerns
Integration challenges with other applications
Application performance (i.e., downtime, speed)
Total cost concerns (i.e., total cost of ownership)
Complicated pricing models
Lack of customization
Difficulty and risk of migration or installation
We can't find the specific application we need
We're locked in financially with our current vendor
None; there are no barriers preventing us from using SaaS
54%
44%
35%
47%
26%
40%
26%
17%
19%
5%
50%
44%
34%
31%
31%
28%
16%
19%
6%
59%
62%
41%
28%
38%
7%
28%
21%
7%
7%
Germany (n=30) UK (n=32) US (n=95)
“What if any, barriers can prevent your firm from using software-as-a-service (SaaS) when both SaaS and packaged options are available?”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: US and EU software purchase decision makers in each country
© 2010 Forrester Research, Inc. Reproduction Prohibited22
And integration with existing systems remain a challenge
Security concerns
Integration challenges with other applications
Application performance (i.e., downtime, speed)
Total cost concerns (i.e., total cost of ownership)
Complicated pricing models
Lack of customization
Difficulty and risk of migration or installation
We can't find the specific application we need
We're locked in financially with our current vendor
None; there are no barriers preventing us from using SaaS
54%
44%
35%
47%
26%
40%
26%
17%
19%
5%
50%
44%
34%
31%
31%
28%
16%
19%
6%
59%
62%
41%
28%
38%
7%
28%
21%
7%
7%
Germany (n=30) UK (n=32) US (n=95)
“What if any, barriers can prevent your firm from using software-as-a-service (SaaS) when both SaaS and packaged options are available?”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Base: US and EU software purchase decision makers in each country
© 2010 Forrester Research, Inc. Reproduction Prohibited23
Some verticals are better suited to SaaS than others, from categories where it is nascent…
© 2010 Forrester Research, Inc. Reproduction Prohibited24
…To categories where it is emerging…
© 2010 Forrester Research, Inc. Reproduction Prohibited25
…To categories where it dominates.
© 2010 Forrester Research, Inc. Reproduction Prohibited26
Buyers of SaaS software have different needs and vendors must be ready to satisfy them.
© 2010 Forrester Research, Inc. Reproduction Prohibited27
“Which, if any, of the following accurately describe your past experience purchasing software for your company on a vendor’s B2B website vs. your own personal experiences of buying similar software online using a B2C site? (Select
all that apply)”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
I find it quicker and/or cheaper to call the sales rep, compared to purchasing through a vendor's B2B site
Many vendors’ B2B sites that I use only allow me to submit quote requests; I have to complete my purchase with a sales rep
Many of the vendors I buy software from have a single B2C/B2B site that is tailored according to my personal/company purchase needs
I have found myself so frustrated with a vendor's B2B user experience that I was compelled to purchase software for my company using the vendors B2C online store
None of the above
26%
24%
24%
21%
19%
36%
23%
29%
23%
14%
Business buyers (n=66)
IT buyers (n=91)
Base: US and EU software purchase decision makers in each role
They are frustrated with the complexity of existing B2B purchase channels and workflows
© 2010 Forrester Research, Inc. Reproduction Prohibited28
They expect a frictionless online sales channel for SaaS software acquisitions
“Regardless of how your firm purchases commercial software today, how would you most prefer to purchase it in the future?”
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Direct from a dedicated vendor account rep
Direct from the vendor's B2B website
Your IT services provider
Direct from the vendor's consumer website
A Value-added reseller (VAR)
A vendor approved solution partner
Your companies ERP software
Online reseller
A local software/computer services company
18%
13%
13%
13%
14%
8%
3%
7%
8%
18%
21%
12%
11%
9%
5%
9%
4%
2%
500 - 9,999 Employees (n=85)
20-499 Employees (n=72)
Base: US and EU software purchase decision makers for companies of each size
© 2010 Forrester Research, Inc. Reproduction Prohibited29
Businesses don’t want to depend on IT for day‐to‐day tasks
“When considering the purchase of SaaS software in your company, please rate how important each of the following online features is/would be to you as an administrator/decision maker?” Rate on a scale of 1-5 where
1=‘Not at all important’ and 5=‘Very important’
Source: A commissioned study conducted by Forrester Consulting on behalf of cleverbridge, March 2011
Ability to purchase in my home currency
Ability for new users to self register online
Ability to pay using my preferred payment / billing method
Ability to view billing information and invoices online
Ability to configure and purchase additional services for users and groups online
Ability to view monthly usage stats online
Ability to add new seats to your account online
Availability of an online account portal for all administration tasks
Ability to manage users online (add/remove/modify accounts)
0% 25% 50% 75% 100%
15%
27%
25%
27%
39%
41%
34%
37%
36%
32%
23%
25%
37%
32%
31%
40%
43%
48%
4 Very Important - 5
Base: 157 US and EU software purchase decision makers
© 2010 Forrester Research, Inc. Reproduction Prohibited30
Business users are ready for SaaS in the enterprise & SaaS is blurring the line
Personal Work
© 2010 Forrester Research, Inc. Reproduction Prohibited31
Recommendations
Pick the right battles, some software categories will always
remain resistant to SaaS
Incumbent software vendors must get on the SaaS bandwagon,
or risk leaving the door open for new upstarts to play on their
turf
Software vendors must re-organize their sales process from the
ground up and get serious about selling their SaaS products.
The transition to a SaaS product portfolio requires much more
than an investment in R&D and technology.
© 2009 Forrester Research, Inc. Reproduction Prohibited
Thank you
Brian K. Walker @bkwalker
blogs.forrester.com/brian_walker
www.forrester.com
© 2010 Forrester Research, Inc. Reproduction Prohibited33
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