We’re based in Australia and have operated in the SaaS space for over 6 years. We’ve seen other companies come and go, primarily because they hadn’t got their heads around the revenue model. They have these wild expectations that they will get a huge chuck of coin up front rather than subscription revenue spread over time.

Having said that, I was very suprised recently to learn that Salesforce.com has changed their concept of subscription revenue to involve up front payments – generally 1 – 2 years in advance. This looks and feels like traditional software licensing to me.

Having lived and worked in Boston, I would suggest the difficulties experienced in the US market are exacerbated by US GAAP where revenue recognition plays an important part in reporting of quarterly and annual results.

I was at a Sales 2.0 conference a while ago and Stu Schmidt from Webex spoke about how they operate in the SaaS model. They are a very good example of what you talk about with respect to changing the sales model to put greater focus on the inside sales team and the tools to close sales via the lowest cost option (i.e. not getting on a plane).

We follow a similar model to Webex (though it seems to be the defacto standard in the SaaS market now). We focus the majority of our sales effort on remote delivery/qualification, and only invest in face to face selling when the opportunity is well qualified and we’re confident the potential project revenue (i.e. professional services) can sustain the f2f cost. Our experience shows that if we can get the new customer past the first 6 months, the stickiness increases significantly. Guess where we focus our customer service efforts?

cheers from down under