Build features that are only available from a SaaS product version – the big guys can’t match it.

As SaaS continues to take root in the marketplace, more companies are emerging that offer little more than a web version of an enterprise software solution. Consider the number of knock-offs of office productivity tools. There are literally dozens of vendors that offer word processing and spreadsheets free-of-charge over the Internet.

However, what is the motivator to change from my existing solution? While version control and sharing features are “nice-to-have” capabilities for collaboration, it is not enough to motivate a change in my habit. More importantly, given that I need to work on a plane, and already have MS Office at home and work, the incentive to make the change is little to none.

An overarching value proposition that cannot be readily duplicated by traditional enterprise software solutions is fundamental to long-term success as a SaaS provider. Specifically, you must deliver a capability, a feature, or information that is facilitated by centralized administration and management of user data. Two great examples:

1. Salesforce.com offers a good lesson by appealing to the VP of Sales, to manage, oversee and access data from remote field sales personnel. Specifically the added layer of oversight, reporting and visibility, has proven to be a sufficient value proposition to spur a migration from enterprise to SaaS CRM solutions, given the immediacy and availability of important sales data.

2. Concur Technologies empowers companies to control expenses and globally enforce travel policies from a centralized management portal. Concur’s solutions are particularly compelling because it readily improves business process and reduces internal administrative costs, while facilitating quick expense reimbursement for employees.

Both of these companies have captured the admiration of the industry, press and analysts, because of their ability to differentiate and erode market share from more significant, established enterprise software vendors. Their differentiation is based on a value proposition that compels a commitment to change and migrate from the old to new.

Competitively, the big guys have more money than you do as an emerging SaaS vendor. Get creative, and examine the business processes of your target user to evaluate how you can offer something compelling, unique and different that is facilitated by your SaaS business model. It must be significant enough to motivate change. 

"Nice to have" doesn't win.

Comments

[Jon Leander]

We’re a mid size business. We use CRM and Sales Force Automation from http://www.LongJump.com. We’re very happy with their products and service.