SaaSquatch – Time for a Change in the Pay Per Seat SaaS Model?

The Last Big One

Salesforce.com was founded in February of 1999.   Best I can tell, that was the beginning of the last real innovation in the business of software.   The pay as you go, pay per seat business model directly challenged the prevailing model of large up front software license fees and perpetual maintenance fees.  Folks my age remember the bright red circle and line through the word “Software” that was integral to the early messaging and positioning of SFDC.  Needless to say – Salesforce.com and Marc Benioff were right, and through a ton of hard work and market making transformed the Software industry into what we affectionately now call the “Cloud”.

That was 17 years ago.   Other than a few derivative business models such as “Freemium”  coined in 2006, there has been a complete absence of innovation in the business model of how SaaS companies charge for their products and services.   For a while, the per-seat model made a ton of sense and was good for everyone.  Enterprises enjoyed massive reductions in upfront fees and eventually could materially reduce CapEx as solutions moved more and more to the cloud.  The SaaS providers enjoyed stable recurring monthly revenues, easier and more frequent product iterations, and far quicker enterprise sales cycles.  Even the economics made sense regarding the cost of goods to deliver SaaS – each big customer required more storage, more processing, more servers and co-locations.  But something changed.  And the business model of SaaS did not not keep up with innovation.

Really it was two things that changed at about the same time:

1)  The number of SaaS providers exploded causing a massive migration to the Cloud for nearly all newly purchased enterprise software; and,

2) The cost of building software, storage, and processing plunged as AWS and others created today’s modern cloud infrastructure.

Proliferation of SaaS Solutions

There is tons of data on the proliferation of cloud apps and it all points up and to the right with regard to how fast SaaS (used to be ASP and now it’s “Cloud”) applications are growing inside mid to large enterprises.  It’s not just Salesforce.com and Box anymore.  To name just a few SaaS segments that have exploded over the past five years:  CRM, ERP, Marketing Automation, Document Management, Finance, HR, Cloud storage, Disaster recovery, Customer Service, and many more.  It is not uncommon for an enterprise to have 30 or even 50 SaaS providers.   That’s a lot.

For many, the proliferation of SaaS solutions creates a data mess.   While each platform may serve its purpose well, companies with any scale are discovering that data is trapped in SaaS silos and difficult to use in support of the “rest of the enterprise”.   For example, SFDC may work well for sales and customer service reps who live in the application all day long, but it fails to provide easy access to Product, Marketing, Finance, Integration teams, Legal, or even the C-suite.  Many companies invest hundreds of thousands, if not millions, to create customer solutions that work across the enterprise but with the pace of SaaS innovation, will likely find themselves back in the SaaS data disaster that has been created.

Interestingly, SFDC understands this issue and hopes to solve it by becoming the center of the SaaS universe with their ecosystem – AppExchange.  Smart.  However, for now, most integrations create a “dumping ground” of data that exacerbates the difficulty of non-sales functions to find what they need to better perform their jobs.   Meanwhile,the once innovative SFDC per-seat business model has now become near-universally despised for taxing growth and success.

Silo’s are Silo’s?

The reality is that Sales reps are the only ones that need all of SFDC, marketing folks are the only ones that need all of Marketo, Finance same for NetSuite, and the list goes on.   However, almost everyone in the enterprise needs a little something from nearly every system to arm themselves with the data required to better perform their jobs.   This is where the pay per-seat business model falls down.   Compounding this pain is the reality that no one wants to learn and use multiple UI’s to get all the data they need.

So…. perhaps SFDC continues to conquer the world and becomes the center of the enterprise data universe?  Maybe.  But now we are back to the reality that per-seat pricing does not work for everyone in an enterprise.   Perhaps it’s time for innovation in the business of SaaS.

Time to Innovate the Business Model of SaaS

What if each functional area of an enterprise could cherry pick the data they require to better perform their jobs from across the enterprise SaaS landscape?  What if you could reduce your current per-seat SaaS costs by up to 30% and pay a simple flat monthly fee for enterprise wide access to all your data in your SaaS investments?   This is what we are building at SalesWise — delivering each person all the data they need to better perform while eliminating up to 30% of the cost of SaaS seat licenses like Salesforce.com.

Take the free Salesforce Audit here to see how much you could save while driving better performance across the enterprise.