There are many small companies building Software-as-a-Service solutions targeting specific applications and vertical markets. There are way too many to list, but you can assume that if there is a software applications out there, somebody is building a SaaS solution. There are a lot of driving factors for the increased emergence of SaaS, but that is not the point of this post. What I want to discuss is how SaaS solutions require a different channel approach than a tradional hardware or software solution.
SaaS companies typically experience an early period of tremendous growth, especially with today's economic climate. Many companies are willing to go to a managed service model with the expectation that they can get equal functionality and QoS, while reducing administrative and operational costs. The challenge that SaaS providers confront is that at some point they will need scale to maintain their growth expectations. Without the capital to build a large, direct sales force, they will need to look at indirect sources.
VARs, solution providers, distributors, and the like have a very defined profit model, one that includes recurring service and support revenues. They expect customer ownership and the ability to up sell and cross sell solutions. They expect revenues from upgrades and service contracts. They expect a transfer of product ownership. They expect manufacturer discounts and incentive programs. All of this changes with a SaaS business model.
It is incumbant on the SaaS provider to find a new model (and perhaps new channels) that creates a profit equation for the channel. Some have tried a sales agency model, others look for OEM channels. These are all great and can work, but there seems to be an opportunity to fundamentally change the model. The smaller, more nimble SaaS startups are in the unique position to be able to try new channel models...experiment, if you will.
I think that the emphasis will eventually change from channel "push" to channel "pull". If companies can create a demand equation...one where there is a community demanding a particualr solution...resellers will find a way to add value. It will come in the form of consulting and integration expertise. It will come in pre-sales engineering and business support. It will be different, but it will come.
These communities will also help in the ongoing development of your software solutions. They will help identify your next feature set. Whether you use an agile development approach or a more traditional approach, this community will have a vested interest in the evolution of your product.
It is good to build a channel that will help facilitate demand, but you cannot ignore the pull side of the equation. Communities of interest is one option to consider.
Thursday, October 30, 2008
Tuesday, October 28, 2008
Why Join Your Community?
As I often do, when I have an idea for a project or new business, I bounce the idea off of my wife. I think I do this because it helps me find holes in my argument when I verbalize it. I also think that my wife gives me a great perspective on what might be the "gotcha's" in my idea(s). As I have mentioned previously, I have become increasingly interested in building communities of interest, especially to help build better and more profitable channel relationships. I had an idea and went to my confidante for her opinion. Her first question was, "why would anyone care?" Hmmm...perhaps my elevator pitch needs some work. But I took her question and did some thinking.
Building a community has to be about passion. Having 100,000 members of your community does not necessarily guarantee that it will be a success. Wouldn't you rather have 1,000 (or 100) community members that are passionate about the goals of the community? I would. I want the individuals that will participate in the discussion, share thought provoking insights, and challenge the status quo. I want them to tell me how to build my channel programs, how to increase loyalty, and how to grow my business. I want them to see beyond their own self-interests and look at building strength across the big picture. I want passion.
To attract these people, those passionate about a community, you need two things. You need a great story and you need to be willing to let the community take over.
A great story is essential. I think that great stories all share three common characteristics. They are simple, compelling, and relevant. You want your story to be understood so that it can be shared and spread. If you over complicate the story, people will be less willing to tell their friends and other like-minded individuals. Next, it needs to be compelling...interesting. Is your story unique? Does it tap into a need or emotion that has previously been ignored? Finally, your story need to be relevant. It needs to matter to the community members. There needs to be some "profit" in it for all members. I think if you are missing any one of these elements, you will have a story that will not spread and will not have a passionate constituency. Build your story and your audience will find you.
Perhaps the most difficult thing to do is to give control to your community. Wikipedia has done this and the results speak for themselves. Companies tend to have a more difficult time with this concept. They want to get involved. They want to challenge the path the community might be headed. It is important to let the community grow. You have attracted intelligent, passionate thought leaders and you need to give them the degrees of freedom to participate.
You can build a community of interest for your channel, but first you need a story that is simple, compelling and relevant. This will answer the, "why join?" question. Then you need to let the community take its course.
Building a community has to be about passion. Having 100,000 members of your community does not necessarily guarantee that it will be a success. Wouldn't you rather have 1,000 (or 100) community members that are passionate about the goals of the community? I would. I want the individuals that will participate in the discussion, share thought provoking insights, and challenge the status quo. I want them to tell me how to build my channel programs, how to increase loyalty, and how to grow my business. I want them to see beyond their own self-interests and look at building strength across the big picture. I want passion.
To attract these people, those passionate about a community, you need two things. You need a great story and you need to be willing to let the community take over.
A great story is essential. I think that great stories all share three common characteristics. They are simple, compelling, and relevant. You want your story to be understood so that it can be shared and spread. If you over complicate the story, people will be less willing to tell their friends and other like-minded individuals. Next, it needs to be compelling...interesting. Is your story unique? Does it tap into a need or emotion that has previously been ignored? Finally, your story need to be relevant. It needs to matter to the community members. There needs to be some "profit" in it for all members. I think if you are missing any one of these elements, you will have a story that will not spread and will not have a passionate constituency. Build your story and your audience will find you.
Perhaps the most difficult thing to do is to give control to your community. Wikipedia has done this and the results speak for themselves. Companies tend to have a more difficult time with this concept. They want to get involved. They want to challenge the path the community might be headed. It is important to let the community grow. You have attracted intelligent, passionate thought leaders and you need to give them the degrees of freedom to participate.
You can build a community of interest for your channel, but first you need a story that is simple, compelling and relevant. This will answer the, "why join?" question. Then you need to let the community take its course.
Wednesday, October 22, 2008
Sharing To Build Something
If you haven't read Wikinomics, I suggest that you do. It is quite thought provoking and especially interesting to those that want to build something. It might be building a product, a service, a new channel to market, a new market segment, or a new process. I especially like the idea of building a new process...a new way to bring something to market. How can you do this in a way that will change the game.
Sharing may be the answer. If you were to take a look at companies or industries where there is a reluctance to share. A fear of losing assets. A fear of losing market control. A desire to hold onto and control an entire development process. An industry that has a set way of bring products to market, regardless of the inefficencies and stifling of creativity. If you can find these, you will find an opportunity to build something completely unique. You can, and will, challenge the status quo.
Napster was the pioneer that brought the sharing of music to the market. There were others, but Napster was the brand that really started the avalanche. The established music industry had a process. They owned the intellectual property. They fought vigorously to maintain control and won in the courts. The reality, though, is that they lost. Their consumers had a better way to distribute music...they had a better way of sharing. The music industry is forever changed. The status quo has been altered.
How many bloggers have tried to write a book and submitted it into the publishing process only to find it inefficient and controlled by a select few? How many frustrated authors are there that write quality material, but just can't reach their audience because the process is inhibiting? What if this changed? What if a company like lulu.com created a marketplace for these frustrated writers and gave them the ability to write, publish, and distribute their work? The process would be affected and probably for the better.
What if a company, recognizing the need for businesses to open up to their consumers, built an infrastructure for these companies to create their own communities. These communities could be used for product development, channel enablement, and the foundation for viral marketing. Xeequa is one such company.
There are countless other industries that will eventually be forever altered because of the ability of consumers, developers and innovators to share their respective expertise to create something new and better. The key is to find one that you can affect and have the guts to make it happen.
Sharing may be the answer. If you were to take a look at companies or industries where there is a reluctance to share. A fear of losing assets. A fear of losing market control. A desire to hold onto and control an entire development process. An industry that has a set way of bring products to market, regardless of the inefficencies and stifling of creativity. If you can find these, you will find an opportunity to build something completely unique. You can, and will, challenge the status quo.
Napster was the pioneer that brought the sharing of music to the market. There were others, but Napster was the brand that really started the avalanche. The established music industry had a process. They owned the intellectual property. They fought vigorously to maintain control and won in the courts. The reality, though, is that they lost. Their consumers had a better way to distribute music...they had a better way of sharing. The music industry is forever changed. The status quo has been altered.
How many bloggers have tried to write a book and submitted it into the publishing process only to find it inefficient and controlled by a select few? How many frustrated authors are there that write quality material, but just can't reach their audience because the process is inhibiting? What if this changed? What if a company like lulu.com created a marketplace for these frustrated writers and gave them the ability to write, publish, and distribute their work? The process would be affected and probably for the better.
What if a company, recognizing the need for businesses to open up to their consumers, built an infrastructure for these companies to create their own communities. These communities could be used for product development, channel enablement, and the foundation for viral marketing. Xeequa is one such company.
There are countless other industries that will eventually be forever altered because of the ability of consumers, developers and innovators to share their respective expertise to create something new and better. The key is to find one that you can affect and have the guts to make it happen.
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