How much downtime would you put up with from your SaaS app?

I've said before that SaaS providers need to think more about the space between their datacentres and the end user. I summarised this post by saying..

To my mind a good SaaS provider should be interested in this additional real-estate. It represents a space that If MANAGED could be a point of differentiation. A way to get the mass of the adoption curve past their current hurdles and a way to provide businesses (who are putting up mission critical information into the cloud) some sort of SLA (and by association reassurance). It also represents the next evolution of maturity in the SaaS model, SLA’s.

To a SaaS provider, the end users service experience is everything. Service uptime being one of the most critical and basic elements of this experience. Unfortunately for SaaS providers, their end users aren't readily going to discriminate between faults that are within the SaaS providers responsibility or in the Telco's responsibility when making their decisions about the viability of continuing with the SaaS app. To them, the app will just be down.

I'm not alone in getting stuck into organisations who provide services over the web for their lack of up-time. Allan Leinwand at Gigaom is too, only he's found some empirical evidence .  (This is the actual service uptime, but as evidence it supports my claims that some of these web applications are too flaky to be considered as business applications)

I acknowledge that these aren't SaaS apps, but the impact can be measured. Look at that Twitter down time, basically one whole working week. Imagine you are the business owner and thats you're business critical app thats down. Imagine not being able to do business for a whole week, imagine paying staff for that week, imagine dealing with customers…. 

Untill SaaS companies get these type of impacts and address them, to me you are going to  have a lot of difficulty taking SaaS mainstream.

 

Can the combined weight of Global Telco’s beat Skype?

A couple of posts today (Om Malik and a follow up on Skype Journal ) discuss a rumoured Skype Killing application that is allegedly being planned for. It seems that some of the Telco heavyweights want to build a VoIP based P2P calling service in order to stunt the success of Skype. Those providers in the consortium won’t change interconnection (on net) calls, but if you call another carrier’s number (and i’ll hazard a guess here) or even a POTS number within the providers number pool, you’ll get charged (like Skype out)

 
It’s a good strategy that has been successful before.  The basics are that you enter an adjacent market, tank the revenue pool in that market to such an extent that the incumbent (Skype in this instance) has no resources left to enter your market because its fighting for its life in its home market.

 
Great plan except for a couple of things fella’s.

Firstly Skype’s disrupting you!, Secondly you can’t tank what is already free, and thirdly Skype is already in your market (the opps too late moment!).

 
Apart from the problems with the strategy, i see a bunch of implementation ew issues with this the approach

 
1) Can these Telco’s work together
2) Can they get a value proposition that isn't "old Telco” going at the same time as “Telco 2.0” – BT is a strong advocate of the “Protect and Grow legacy revenues”. How will this fly?
3) Can they suffer the cultural change of not charging for calling?
4) Can they physically build it
5) Who will buy it? – only ray of hope is that they have financial security that Vonage etal don’t. They have a long way to go here. Skype’s adding 360 000 subscribers a day. That’s growth no Telco except China or India has dealt with ever.

6) Can they sell it? Big step change for a sales teams

 Thoughts on this anyone? Smacks of desperation to me.

Where incumbents go wrong

A guest post from the unreasonablemen.net

I saw this from Ovum analysing SAP’s Q1 financials. There are a couple of take outs from this that really struck me with respect to SaaS and incumbent business models.


1) the company is still growing its core business (double digit growth no less).

2) The SME product group is going gang busters 18% growth

3) they’re SaaS offering is not performing (now there’s a surprise!)

4) they are going to address this by only focusing on selling SaaS (wait for it…..) into those markets where they have been successful selling on prem… uh oh!

Lets break this down a bit.

1) SAP are selling a heap of core enterprise apps, solutions (services) and mid market core app.

From the aggressive growth this you would have to postulate that the focus of the company is on … core stuff with big numbers. That’s like heroine. Try to stop using that and you are going to have withdrawals…stock market, staff and customers….

2) They’ve decide to “…. focus for the remainder of 2008 on Germany, the US, France, the UK and China, where most of its existing customers are located” and “SAP will reduce its “accelerated investments” in Business ByDesign this year by about €100m – a decision prompted by the slow uptake”

Basically selling SaaS into those very markets (and companies) where they’ve already sold on prem solutions to, but with a 'lesser' product. This is a multi faceted strategic faux pa, and they aren’t alone is doing this.

This whole situation highly reminiscent of a conversation I had with a leading SaaS CRM vendor. My contact had actually set up a meeting with Seibel in an effort to coach them on how to be more successful. He’d done this because their performance in the SaaS space was so woeful it was (in his opinion) damaging the growth of the SaaS market.

The key issue, they were targeting their existing enterprise customers with their SaaS offering, BUT only when they have failed to sell the on-prem version…. To put this in context, Seibel’s sales approach is approach their existing customers (who they’ve convinced to buy expensive on prem stuff), try and sell them more expensive on prem stuff, and when they loose the deal go …well we’ve got this SaaS thing that’s cheap… nice!


So what are the problems with this approach?

1) you are damaging your brand. If like SAP you are the king of the heap in a market, known for a certain thing, why risk damaging this with a competitive offering

2) The way you sell this is different. SaaS isn’t the cheap and cheerful part solution, it’s a fully functional alternative that has its own value proposition that needs to be properly articulated in order to be successful

3) Saleforce skills and rem. The only way to change this is to change the way your sales teams sell and are rewarded. They sell what you pay them to sell!

4) Sharemarket. The sharemarket isn’t exactly enamoured with the idea of you tanking your cash cow revenue stream. They only dislike that only marginally more than large investments in new technology that fail and essentially eat into their payouts. No way are they going to support you doing this long term unless you can show it’s a stonking success. Neither Seibel of SAP have done that.

In years to come, do you think students will read case studies on how not to embrace a disruptive technology that include SAP, Seibel or Microsoft?