The market for software as a service (SaaS) and software on-demand is growing rapidly, led by the success of firms such as Salesforce.com. Instead of paying an upfront licensing fee to purchase the software and servers to run the application on, the user simply pays a monthly fee to the provider for access to the software and the hardware it runs on. Storage, data replication and some level of user support are included in the monthly cost. The application is available to the user from any Internet connection worldwide. Alternatively, options exist to provide managed software application services out of a telco-grade data center for applications not available in a SaaS model and/or when the customer has software on site already licensed and does not want to migrate to a new platform.
What does an agent, VAR or managed services provider need to understand about potential customers, the selling message, targets and the technology to address these market opportunities? The following questions will help you to prepare for successful SaaS sales.
1. What are the key triggers that will open up SaaS for managed application services opportunities? The following are common triggers:
- A drive to reduce or redeploy IT resources to business critical issues and away from support for standard software applications.
- Having a limited or overworked IT staff
- Purchasing a new application or requiring a major version upgrade of existing software (including migration from Lotus to Exchange or moving between Exchange platforms)
- Security and Regulatory Compliance Concerns: HIPAA, SOX, FINRA
- Desire for improved service levels available out of a data center environment
- Need to accommodate a variable environment — can be characterized by both rapid growth or the need to manage downsizing the organization
- Need to support multiple locations — with appropriate levels of IT control in a decentralized operating environment.
2. Are you positioned with key decision makers at the C level or within the IT department? Each decision-maker will have different drivers. The drivers for C-level executives will include total cost of ownership, ROI, regulatory compliance, disaster recovery and business continuity as well as user experience. IT decision-makers will be more technically focused and tend to be driven by their internal workload. If projects are lagging and resources can be freed to help the business differentiate itself, the IT department will be interested.
3. How can you overcome key objections? C-level management will be very concerned with data security/application availability and the financial viability of the provider (a leading indicator of provider longevity). Be prepared to provide basic information on other clients using the provider in similar lines of business, the provider’s financials at a high level and the provider’s capabilities relative to SAS 70, HIPAA and other regulatory requirements.
The IT department will have some of the same concerns and will want more technical information, but will be much more likely to have questions about control of the software and operating environment. Be prepared to have technical resources from the provider available to answer questions on data backup, restoration, network redundancy and availability and the like. You may find that a half step to address concerns about control on the part of the IT shop is to offer virtual or dedicated servers as a solution. In this scenario, the customer would receive the benefit of the data center (multiple ISPs, hardened facility, physical security, redundant fiber, mirrored hardware and all the rest) while retaining control over the server —either virtual or dedicated. The customer would have a console to access the server just as they do on their internal LAN.