There’s been a couple of interesting posts lately on SaaS, how they can bring down their sales and marketing costs (a really interesting take by Sinclair at SaaSblogs) and a taxonomy of what a SaaS companies value (by Ben Kepes) is.
To me both posts point to a clear need to differentiate yourself, or to use the parlance of Blue Ocean Strategy, play in the blue ocean (underserved by current market offerings) rather than the red ocean (where you compete on price and bleed).
Sinclair and Ben both point to SaaS offerings that are basically doing the same as existing offerings (SaaS/s , ROF or my preferred version SoSaaS according to Phil Wainwright)
The simple fact is that none of these SaaS plays are doing anything new. They should have a large sales and marketing budget, they are undifferentiated and quite frankly are fighting an uphill battle (I suspect on the back of SaaS business model hype).
So what constitutes a good SaaS play in terms of a startup, investment or a good company to join.
Well here are my 3 cents
1) The service delivered does something that doesn’t already exist (Sinclair’s swarm based marketing in his post is a great example)
2) Its something you can sell to an individual and have them make the purchasing decision, not a committee
3) The implementation isn’t disruptive – no data to move around, nothing to install ideally
4) Not tied to a geography, can be consumed anywhere there is a network. This is often missed by north American companies but boy do kiwi companies get it
5) It works well with entrenched software investments
6) Customers can configure it to their needs
I’d be interested if others think there are more. But to me if you pull this off, you are definitely playing in the blue ocean. Then if you are successful you will get copied and have to do it all over again.