This might seem like a silly question, most marketers (which I am) will crawl over broken glass to tell you that its everything And to some extent it is. (Seth Godin’s post on Hunger is brilliant at describing JUST how powerful). But picture this. In a SaaS framework, especially where you are taking a utility service, does the brand REALLY matter?
I was reading the comments on Mary-Jo Foley’s post about sharepoint in the cloud and was struck by the intensity of the brand dislike coming through. Classic anti-Microsoft vitriol. But if I wanted I could find the same on Google, opensource products etc.
Given that any decision to move to a SaaS application should include the ability to extricate yourself and your data from that provider, does the brand thing even matter? Consider email as the example. Most would agree its a utility application, valuable but utility. If you get antsy with what you get from Google, move to Zoho. You get Antsy with Microsoft move to Zimbra. You get the picture.
In that world, does the brand actually mean anything? Do you know what brand of road you use? What about the tap water? Does the provider’s brand mean the utility provided is any different from their competitors? What about if you bring your historical perceptions to the table in a SaaS world, does it make a difference? Really make a difference? Why would you pay differing amounts? Would you fall for the marketing?
Phil Wainewright put up a very thought provoking post this morning, speculating if Zoho could outgrow Salesforce.com. A worthwhile read, the stand out bit being his summation.
A disruptive model? Just as Salesforce.com’s CEO Marc Benioff dismisses conventional software vendors such as Oracle and SAP as dinosaurs on the verge of extinction, so Vembu looks on Salesforce.com’s high-cost, premium-priced model (in comparison to Zoho’s) as a throwback to the days of old-fashioned enterprise software.…. Meanwhile, Zoho’s decision not to turn to advertising as a source of revenue is also appropriate for the business market and a useful differentiator against Google, the other big player making headway in that mass SMB sector. On balance, Zoho’s model offers enough value to an underserved market to qualify as disruptive and its state of preparedness for a difficult economic environment could well see it emerge the other side of the coming recession as a leading player.
This got me to thinking. So far most of the we dialogue on financial models has been based around a number of streams
There is another way to get scale, then monetise internet assets, funnily enough it’s a variant on the Google model and its being used by Zoho.This approach is to use an existing revenue engine to fund the growth of the start-up, in Zoho case its Adventnet who are funding Zoho.The interesting dynamic here is the financial impacts. No credit you see, organic growth but with no debt. I don’t believe people fully understand the economics at play here. The scale challenges a startup have to conquer are enormous, but when you get there your marginal costs plummet and accordingly your profits go up. Check this from Zoho. Google and Microsoft have clearly reached scale (in their own markets), Salesforce.com hasn’t… yet. I’m told that their PaaS play is starting to really reap benefits, huge customers signing up, customers putting Tb’s of Data thru a day. All driving EoS.
Back to Zoho, the more i look at it, the more i like the model. Self fund to scale, charge for premium services, consider a slow introduction of pay as you go later (i’d put in an easy migration path for those who aren’t ever going to pay). And keep in scaling. Its Amazon’s mantra all over again, ‘GBF’ “Get Big Fast”, but without the debt and a fairly logical path to monetisation.
Earlier this week I posted my thoughts on what I saw as convergence between SaaS and social networks. I listed out some striking similarities between the two. Then on the back of a comment from Bob Warfield I wavered in my views. I was wrong.
Today I see on Read write web this example of a collaboration tool being offered through facebook.com. This is a perfect example of convergence. It makes sense when you think about FB’s roots. University based social networking is now colliding with team based projects “-viola a hosted collaboration tool in a social network". The Myoffice product that RRW mentions looks and sounds massively like Zoho and Zimbra. Why can't this work for me? I’m a business user I have a FB identity and occasionally want to do projects “collaborative projects” with other FB users. Isn’t it nirvana to have one place to be a consumer and business person. Micro businesses or SOHO are by definition 1 man band, just how you distinguish between me as a one man band and me as a one man socialiser is a moot point. I will want consumer services and business services when and where I want them and if I can get them from the same place, isn’t that a better thing?
Another point I want to mention, why can’t SaaS be consumer focused? Isn’t internet banking a [clunky] SaaS application? It completely disrupted on premise banking and its consumer focused. Gmail is a classic example of this as well, clearly its trying to extend upwards into the SMB space.
I reiterate that the platform as a service play spans these two phenomenon. And to my mind we have a uniquely paradoxical situation. SaaS vendors have the applications and in some instances like Force.com the platform. While Social networks have the mass user populations. The key is marrying the two together in a way that makes sense. Collaboration is one, CRM could be another (facebooks friends function could be called a rudimentary CRM system after all – and its great for doing reunions etc)
The three key unifying forces here is the internet as a channel, getting holding and using identity and the mashup platforms being developed.