Boris Evelson tweeted a fine question yesterday morning, but it’s too easy: how to define Saas? If he’s going to all that trouble, why not also define Saas’s younger siblings: platform-as-a-service and infrastructure-as-a-service. To be a real hero, though, he has to take on the real pain: how to pronounce “Iaas” and “Paas.”
Mark Albala witnessed something through a client that helps explain the cloud’s ascent: The client bought a $25,000 product, and got a bill from their technology group of almost $150,000 to install it. The client’s response: “What is this s—-?” They’re now seriously considering SaaS.
He is president of InfoSight Partners. “[SaaS] is not catching on because it’s cheaper. It’s not,” he said. “It’s not catching on because it’s more efficient. It’s not. It’s catching on because companies are tired of dealing with these technology groups.”
SaaS has what many tech groups don’t have: agility. Most large corporations, he says, have embedded, well-defined development processes that take things from conception to production, with lots of people involved for checks and balances.
Sarbanes-Oxley is a big piece of that, he says. It causes rigidity.
It’s all expensive and slow — while business people stand there, hopping with urgency.
Finally out of patience, business runs from IT and into the cloud — where they meet their needs.
But they possibly meet danger, too: multiple stovepipes.
“The understanding of why they shouldn’t establish multiple stovepipes,” he says, “is not going to be there.”
How does a responsible technology group remain responsible to its client and yet support the client? Tech groups can remember, he says, that they have to stay agile.
Here are two tips from LucidEra veterans Ken Rudin and Darren Cunningham about BI in the mid-market: Forget “freemium” — the new term for free service leading to paid service — and be wary of users’ ability to analyze data.
Rudin co-founded the company and in June saw it fold for lack of renewed funding — in spite of what he described as “extremely happy customers” and a rapidly growing base. At the end, Rudin was chief marketing officer and Cunningham was vice president of marketing.
Unlike in sales to enterprises, the mid-market customers LucidEra pitched typically lacked skill in data analysis and had little time to learn.
At first, LucidEra offered a 90-day free trial of its SaaS analytics — the “free” model, which assumes non-paying customers are completely self-service. That failed. Half the prospects said it was great, said Rudin, but the other half balked.
“We asked them, ‘Well, didn’t it meet your needs?'” he recalled. “They’d say, ‘No, we just don’t see any value there.'” His voice rose as he recalled his surprise and exasperation. These customers had been using nothing more than spreadsheets. “It made no sense to me. How could they get no value?”
When he questioned further, he found they’d been doing “essentially nothing interesting” with the service. They had been running the simplest reports, not asking new questions or reaching for new insight in any way.
“We were offering a powerful tool,” he said, “and they were saying they didn’t know what to do with this thing.” He compared it to installing an MRI machine in someone’s living room and expecting the person to diagnose themselves.
“Free” has worked for some BI-related vendors — he mentioned Salesforce.com and Jaspersoft — but never to untrained users who must be convinced of the value.
LucidEra dropped free trials and instead offered the free Pipeline Healthcheck. It was a cookie-cutter approach, said Rudin, to demonstrate the value. He compared it to a routine medical checkup. Any doctor knows if the patient’s blood pressure is too high, as any analyst can tell if salespeople should let go of dead prospects sooner.
Customers liked it. Many came away with pages of notes from the discussion about what to do. For example, LucidEra found a significant opportunity for a cable company in the Northeast.
At first, Pipeline Healthcheck seemed to work. Then usage fell off. When LucidEra called to ask why, customers explained, “When you came out here and told us all that stuff, that was great. But we can’t remember what you did. We just aren’t as good a this as you are, so we can’t use it.”
Several customers asked if they could simply buy the analysis service. They wanted LucidEra to come in once a quarter and do a health check. “Instead of having an MRI machine,” said Rudin, “they just wanted a doctor.”
Cunningham said, “Don’t overestimate people’s ability to interpret data.”
That’s why we have professional data analysts.
SaaS vendors who also sell on-premises versions have a tricky little problem, Claudia Imhoff says. How do they sell both at the same time?
A few people from SaaS vendors who attended Claudia’s Tuesday session mentioned two strategies: One is to separate the sales forces, with one selling the on-premises version, and another selling the online version.
These vendors could also sell the shareware way: let the online version be the lighter, simplified one. Let the on-premises version include all the extras.
They better figure it out. Right now, she says, there are just too many SaaS vendors in the market.