Software as a Service (SaaS)

Almost a year ago, I posted a blog titled “The Case for ‘Revenue Performance Management’ in the Front Office” where I introduced this new category of performance management targeted to the unique needs of the Front Office, line of business users who control the top-line for a company.

I believe there is tremendous opportunity in delivering Back Office-like performance management techniques to the Front office to enable better business decisions by the lines of business, so I reached out to SignalDemand, one of the companies I mentioned in my last post, to test whether the framework I had developed has mapped to their experience on the ground.  » Read the rest of this entry «

Last year, I asked my friend Cary Platkin, a tech attorney specializing in SaaS/cloud issues, to contribute to this blog with a Q&A on the SaaS Business Model and Some Common Legal Questions.  That posting was so well received, I asked him to come back again with whatever issue was most pressing for his clients these days.

Not surprisingly, he said SaaS and cloud-based companies are struggling with the liability issues associated with customers’ number one concern – security.  Customers want vendors to assume unlimited liability for security breaches; vendors want to restrict and cap their liability. Negotiated subscription agreements often end up somewhere in the middle.  So, how can a vendor give its customers a high level of liability protection and still sleep at night?

Based upon my conversation with Cary, the answer may lie in a good cyber liability insurance policy. » Read the rest of this entry «

I just finished reading a post on Sandhill.com titled “Best of Breed vs. Suite in the SaaS Era“, a Q&A session between Maryann Jones Thompson, editor of Sandhill.com and Sina Moatamed, CIO of BendPak/Ranger.

The general premise of the article is that SaaS point solutions or “best of breed” are going to eventually be replaced by suites – just as what happened with traditional enterprise software applications. » Read the rest of this entry «

I am well aware that the stereotypical venture capitalist is portrayed as someone who barely pays attention to the entrepreneur’s business presentation, constantly checks his/her Blackberry/iPhone during the critical funding meeting, and appears to be more concerned about the weekend plan than the business plan being presented.

TheFunded is filled with critical commentary by entrepreneurs about venture capitalists and cite real life examples that reinforce this stereotype. » Read the rest of this entry «

Next week, we are scheduled to meet with one of the SEC commissioners, Troy Paredes, and his Counsel, Scott Kimpel. They will be here in Silicon Valley to meet with a number of venture firms to get our perspectives on:

• The investing environment / opportunities to sustain the growth and competitive advantage of the American economy
• The exit environment
• The capital raising environment for VCs
• The positive and negative impacts of rules and regulations on the venture community and its portfolio companies

» Read the rest of this entry «

I recently caught up with Cary Platkin. Cary is an attorney and more specifically was the in house attorney assigned to the CRM On Demand  & SMB divisions I ran at Siebel Systems. Cary was instrumental in developing Siebel’s CRM On Demand Service Level Agreement (SLA) and helping me and my organization negotiate many Siebel CRM On Demand contracts. 

I really enjoyed working with Cary because he acted as a member of my management team; he first focused on the business objectives I wanted to accomplish and then applied law to help me accomplish those objectives. He also helped me negotiate through a minefield of sticky issues like Vendor Specific Objective Evidence (VSOE) for revenue recognition and managing SLA issues.

Cary now has his own legal practice, Platkin Law,  and one of his specialities is helping SaaS startups. I asked Cary if he wouldn’t mind addressing a number of common legal issues that SaaS companies are faced with and he was kind enough to oblige.

» Read the rest of this entry «

Recently, I was interviewed by ReadWriteWeb about investing in enterprise applications. The following is a link to that interview.

Investing in Enterprise SaaS

In my last blog entry, I asserted there has been a dearth of start-ups in the enterprise software market for at least the last 5 years. According to VentureSource, from a high of 506 enterprise-oriented software start-ups securing a Seed or Series A round in 2000, only 201 new enterprise-oriented software start-ups were funded in 2008 and the vast majority of those used a SaaS, PaaS, or IaaS business model. Very few traditional model enterprise-oriented software companies were funded at all, the notable exception being in enterprise search and analytics.

As a result, large software companies whose innovation/growth strategy has relied upon a steady stream of start-up company candidates to acquire may be faced with a shortage in the not-so-distant future. Consequently, companies that have traditionally relied upon their strategic software providers to deliver innovative new solutions to enable them to further optimize back office and front office operations will suffer. 

» Read the rest of this entry «

This is a follow on to my post on July 18th, 2008 titled “Does it Really Take $100M to Build a SaaS Business? Say it ain’t so, Joe!”. As part of some research I’ve been doing, I wanted to dig into the actual amount of capital it takes to make a successful SaaS company.

Wachovia Securities issued a report in May 2008 on the state of the SaaS market. On page 25, it shows amount of capital paid in prior to an IPO for 18 out of the 28 public SaaS companies. Here is that list below:

» Read the rest of this entry «

Over the past year or so, PaaS – Platform as a Service - has emerged as a new and interesting strategy for Salesforce.com with Force.com and NetSuite with NS-BOS. The value proposition for developers is:

• Object-oriented development environment for rapid prototyping and application development.
• “Out-of-the-cloud’ integration with other applications developed on the platform
• No need to invest in commodity operational infrastructure such as “ping, power, and pipe” and disaster recovery services which can be expensive to set up yet completely non-differentiating.

So, if you’re a SaaS application developer or investor, what’s not to like?

Well, first let’s talk about the SaaS business model.

» Read the rest of this entry «