There is an inevitable shakeout coming to the SaaS ecosystem, increasing the pressure on corporate leadership over and above that brought by the economic downturn. More and more companies are entering the market with SaaS offerings, spurred on by the growing successes of the forerunners and the inherent advantages of the new delivery method. The increased competition, however, is not the true concern. The real challenge facing SaaS CEOs is how to transcend an unnecessarily limited business model.
“We’re a software company.” The invisible constraints in that self-definition will have profound effects upon the corporation’s potential for success. Focusing on a narrow view of what a company is and does invariably conceals significant avenues to enhanced profitability. The willingness to look past the definition of a software company that is still festering underneath the SaaS paradigm and sapping its vitality â€” and to take appropriate action â€” may well be the determining factor of long-term corporate viability.
Software As A Vehicle
There is a vital lesson for every SaaS company CEO to be learned from the examples of software companies such as Google and Intuit. Both have been exceptionally successful in terms of revenues and market share by not insisting on living within the boundaries of software thinking. Google’s software is freely available worldwide. Intuit, at one point in its history, earned far more money from selling paper than it did from their software. Those who consider themselves and their companies as being about the production and distribution of application code are missing the point. The real value is not in the software but in addressing the need of the customers to increase their own effectiveness, productivity and profitability.
Opening the Door to Opportunity
It’s time to revisit/broaden the business plan, identify and question the core assumptions that have been made about your company, chosen market and product definition. The potential of channel partners to contribute to your success should also be thoroughly explored. The analysis will take courage and commitment, but the potential rewards of market share, leadership and long-term profitability are more than worth the effort.
Surviving the coming shakeout in the SaaS community is one issue. Rising above that wave to become one of the leadership examples is yet another. I’m here to help; let’s talk.
This is the first of a new series for The HotLine Magazine, Beyond Software to Success.