“What do you regard as the top questions ISV’s are asking themselves when considering offering a SaaS model? Both commercially and technically?”

A friend of mine asked me the other day on email- “What do you regard as the top questions ISV’s are asking themselves when considering offering a SaaS model? Both commercially and technically?”

I spent a while writing him an email and thought it would be a shame not to share the thoughts with you.

The fundamental problem is that ISV’s mostly don’t know what questions to ask, even if they do, they don’t know which ones are important and why.

The best place to start is Bessemer’s laws.

That gives you a foundation of what a SaaS company blueprint should look like- nothing like what a perpetual / licensed software company looks like… so there’s a lot of pain ISV’s have to go through to transition, if they make it there at all… The worst part of it is most of them don’t realise the pain they’re going to go through before they start the process because they don’t know about the experts/best practice available in the industry.

Joel York’s 10 do’s and don’ts is another good example of documented best practice.

But it goes deeper than that.

Duane Jackson (@duanejackson) wrote a brilliant post on why SaaS is different and needs different DNA to make it successful .

“

1. Software for the web bears no resemblance to software for the desktop, they have lots of experience with the latter, but none with the former. The skills are not transferable – that’s what doomed the Sage Live project. Software for the web is not in their DNA.
2. SaaS is a business model as well as a software delivery model. That business model cannibalises the existing models of software companies like Sage. You can’t have the same people responsible for pushing forward a SaaS company and a old-style software company

To me the solution to both problems is pretty simple:

They need to get a new company up and running, owned and funded by Sage PLC (although I know a few VC’s who would happily pour money in)  – give it a big fat budget and some good project managers and let it run independently. “

So where does that leave existing ISV’s transitioning?

Creek. Paddle. Anyone?

So what about my friend? He wants to sell to transitioning ISV’s… In my experience, selling to transitioning ISV’s is hard. Software companies often have an attitude they can solve any problem (they write software after all) and don’t realise the challenges that lie ahead. Selling them on the “known unknowns” is really hard work- trust me I’ve tried it a few times and it doesn’t yield good results.

It’s the whole build vs buy debate writ large. My good friend Mike Dunham wrote a great post on that.

But that still leaves the problem- customers are going to be demanding subscription license models from ISV’s (that’s not SaaS BTW) so they can leverage things like Cloud Computing – Specifically Infrastructure as a Service and need their providers to change with them.

I think ISV’s therefore have a choice, evolve or die. The problem is, just by evolving, some will die- but they don’t have to.

If I were an ISV looking to get into SaaS, I’d be looking at utilising best practice like Customer Development, Lean Startup, Startup Marketing and AARRR techniques combined with strategy from Bessemer in a separate team. Steve Blank in Four Steps to the Epiphany quotes successful product launches where they’ve done this with success (think Kodak) and failure (think VW Phaeton).

You’re much more likely to have success using tried and tested techniques than ploughing your own furrow hoping for the best.

Fundamentally, the business of SaaS is not the same as the business of Software- anyone who tells you that clearly doesn’t know what they’re talking about and needs to be avoided as quickly as possible otherwise it could be a expensive lesson…

Anyway, what do I know- I’m just a lowly Product Manager

p.s. Random trivia for you- I once worked at the Royal Naval Hospital in Plymouth which was converted into offices- apparently that’s where the phrase “up a creek without a paddle” originates from because they used to transport patients off ships up the creek and lock them in the hospital behind 18 foot walls until they got better (or died).

Update:

Lincoln Murphy has literally just released his slides from “Think you’re ready for SaaS” which are excellent and worth a read. Post here and slides below: