Ben has two classifications of SaaS – SaaS/s and SaaS/v, differentiating offerings by those that (s)ubstitute existing software and those that add (v)alue. The SaaS/v classification makes sense, but SaaS/s seems to be based on the comparison with existing software, not on the characteristics/model of the SaaS offering itself and how it compares with other SaaS offerings. Maybe better classifications would be SaaS/c and SaaS/v?
SaaS for commoditization:
- Drivers are quality, cost and service
- Audience is mass market (long tail)
- Indirect sales needed to keep price competitive
- Not necessarily a commodity yet, but being commoditized through innovation in improved delivery and optimizing established features
SaaS for value-add:
- Drivers are added value, integration, collaboration
- Market is niche
- Direct sales needed to educate market, so must be priced accordingly
- Innovation is in new markets and new products
Typically low cost SaaS will commoditize a product so that high value add-ons can be sold on the low cost platform, but SaaS/v shouldn’t be low cost because its not a sustainable business model. Unless of course the business model is buy a customer base and then be acquired.
6 September 2007 at 10:03 am |
Fair call Andrew – but the nomenclature was developed becuase those going down the SaaS/s route do precisely that – take a standard product (not neccessarily software) and substitute it with SaaS delivery.
TradeMe is SaaS/s slowly moving towards SaaS/v