TWIS 3- This Week in SaaS 3

TWIS Events

Last week’s giveaway for the Cloud conference in Israel was so successful that they’ve given us two more passes! The speaker lineup still looks fantastic and I’m gutted not to be there.

On the flipside we’ve got two tickets for next week’s Business Cloud 9 Summit in London on the 2nd to give away- worth £295.00 each. Marc Benioff (CEO Salesforce) is doing a videocast and Zach Nelson (CEO Netsuite) amongst others are speaking. Parker Harris (Salesforce co-founder and EVP Technology) will be in person and on the panel taking questions. If you watched any of the dreamforce coverage last week you’ll have seen Parker launch all the new products on stage. I can’t wait.

To enter, email me- jp@justinpirie.com with either “Cloud Israel” or “Cloud 9” as the subject. I’m going to give preference to people in country who enter and draw on Monday.

TWIS

Last week I wasn’t sure about what the Google Chromium OS meant for us in SaaS, but I actually think it’s an incredibly positive play for us- essentially it is a super lightweight OS (boots in 7 seconds) which is designed to use the internet with no local storage. That means that it can’t install any software or store anything locally and I think the SaaS segment is perfectly positioned to take advantage of this. Because the OS is so lightweight, the devices are going to be much cheaper, easier to use, less complicated to support, use less energy and pay no “Microsoft tax”. Google has such a strong brand I can foresee companies using it where employees don’t do complex tasks and it could push SaaS adoption even further. TechChrunch has an interesting perspective on it.

On Wednesday- I went to the launch of Eurocloud UK- thanks to Phil Wainewright for organising. What surprised me was the amount of debate around whether SaaS should fit into the “Cloud” definition. Personally, like I said last week, I’ve come round to it and I think Bessemer segmented it really nicely in this diagram:

For me it boils down into 3 simple concepts:

• Software on demand (SaaS)
• Platform on demand (Paas)
• Compute on demand (IaaS)

The nice thing for us in the SaaS space, is that we’re in the biggest market ($21B in 2012), with the most maturity, value add and margin. A vendor at the front of the room at EuroCloud (who I couldn’t identify) said that they’re prospects understand “Cloud” much better than “SaaS” and it’s helping them close business faster. Anecdotal, but maybe something we should all be thinking about?

Also- I’ve posted this before but Appiro’s Interactive Cloud Ecosystem map might help you get to grips with the various categories and space better.

There was too much to include this in last week’s TWIS, but this Sandhill article on how to execute on Bessemer’s laws is excellent. Tell me if you’re getting fed up with me referencing Bessemer, but it seems to me like they’re one of the only sources giving away excellent knowledge backed up by credibility. One of their associates, Sarah Tavel called this knowledge sharing, Bessemers “Freemium” model.

I’ve been having quite a few conversations recently about twitter- a common quote being “I don’t get twitter- why is it relevant to me, SaaS and B2B in general?” So I wrote a post about it for you.

Generally speaking, I really don’t like “Top 10 predictions for next year” type blogs- but I took exception to this one, because I think the Marketing Automation space is so important to us in SaaS. As I mentioned in my twitter and social media post earlier today, buyers are changing how they buy software. They are better informed and look at different sources. You can no longer count on them registering on your website and speaking to sales. They’ve probably read a blog post online and asked people on twitter. If you’re not getting involved with that conversation, you’re letting sales pass you by and your CAC is going to be higher.

Stuart Wheldon wrote a great post entitled SaaS, social media and the economics of smart buyers and included this helpful diagram:

Marketing Automation is a great way to get involved with the conversation and to develop automated, scalable processes for nurturing leads. The foundation of nurturing is content- sending your prospects great content at the right time is key to educating the buyer to include your product in their selection.

With that in mind, my Group Member of the week is Mark Gibson. Mark is a regular contributor to the group and specialises in SaaS Sales and Marketing- but what really interested me, was that Mark delivers consulting in the UK on a product called Hubspot. He’s at the front line with his customers and sees the results. Mark was saying that in SaaS we need to more closely align sales and marketing in SaaS and that echo’s what Steven Woods said in the post from above:

11) Measuring the Revenue Engine:

As the above trends evolve in 2010, marketers will begin to develop their ability to predict revenue trends well in advance of sales, by measuring and analyzing the overall revenue funnel. Marketing leaders who can do this will become among the most strategic executives at the board room table.

I think we’ll see a trend in 2010 where marketing is going to become much more quantitative and much less qualitative. Using Marketing Automation tools, Marketers are going to much more closely predict revenue and have much more control over the funnel. I wonder whether 2010 will become the year when Marketing becomes much more target / bonus driven too?

Mark took me on a tour of Hubspot, which I have to admit I haven’t done in a long time, but I was really impressed with their additions in social media, namely twitter, facebook and Linkedin Answers integration. I think it’s a really good entry level product for someone who wants to start in Marketing Automation. I really like Hubspot’s overall look and feel and it’s something marketing could get to grips with easily. For me, I think I’d prefer a more advanced product like Eloqua where you can customise the nurturing based on what the prospect is doing, i.e. their digital body language not just time based.

The other thing I liked about Mark, was he is part of the “nail it before you scale it” school of sales and marketing. Too many times I’ve seen companies increase headcount before they properly understand why customers buy and the “messaging architecture” is in place to support scaling as Mark calls it. It’s similar to what Mark Leslie founder of Veritas called the Sales Learning Curve:

The time it takes to achieve cash flow breakeven is reasonably independent of sales force staffing. It is, instead, entirely dependent on how well and how quickly the entire organization learns what it takes to sell the product or service while incorporating customer feedback into the product itself. Because the entire organization has to come up to speed, hiring a large initial sales staff does not speed up the time to breakeven, it simply consumes cash more quickly.

Mark is originally an Aussie and spent 12 years in the Valley and now lives in Scotland…(great for golfing apparently). I guess we’re kindred spirits really, since I live in Bristol… I really enjoyed my time on the phone with Mark, and I want to thank him for his contributions to the group. His blog is here.

Ironically, the founder of Hubspot, Dharmesh Shah wrote a really good review of a pricing book including how they initially priced hubspot. If you don’t want to make the same mistakes they did, then reading the post is well worthwhile. Even better than that you can get the ebook version free here.

I’m going to be at Business Cloud 9 this week, I always like meeting group members- so don’t hesitate to reach out to me. If you want this delivered to your inbox in its full HTML then subscribe here or via RSS here.

In other news:

• My penchant for metrics, Bruce Cleveland wrote a good post on why SaaS companies should keep their customer acquisition costs to less than one year to preserve cash.
• Microsoft reveals they have 300,000 servers in their Chicago datacenter (yes 300 thousand). They clearly care about scaling their online services.
• Andrew Chen wrote a great summary on adding usability to Agile. Especially useful if you want to “Fail Fast, Fail Often” a la Eric Ries.
• Joe Pulizzi wrote his content marketing tips for next year (the foundation of Marketing Automation/lead nurturing).
• A great list of VC bloggers by number of subscribers- you should be reading them if you’re looking for funding. My favourites are Fred Wilson (#2) and Mark Suster (#39).
• Fun post on competitive advantage “”S**t, that’s not fair!” When does a competitive advantage matter most?”
• Detailed post on MS Azure

In the Group:

• What apps are suitable for the cloud?
• Configuration Management in SaaS
• ROI in SaaS?

There are also loads of SaaS specific jobs in the jobs section- so check them out.

We also went over 14,000 members this week

Thanks to everyone in the group for all your great contributions, and as ever, if you want to reach out to me, please do