The death of IDC by you and Google-SaaS

I’ve been saying for a while that SaaS vendors have a direct line of sight into their customers. But I’ve omitted to explain what this means to professional accountants. First, let’s step back a couple of days when I provided a commentary on the recent ICAEW study of business applications.

Today I saw the study in full. Disappointing doesn’t come close to how I think about this waste of £80. But then I shouldn’t be surprised. The ICAEW had to sift through 1,000+ incredibly detailed interview sheets. Even then, the research is littered with caveats and if-but-then statements. This is typical of what we have come to expect from interpreted quantitative market data analysis.

For instance, the survey makes the improbable claim that 100% of Sage Instant users would recommend the software. If that is true for the population of Instant users as a whole, then I will personally hand deliver a brace of Petrus to Sage CEO Paul Stobart.

SaaS vendors 100% know every customer coming onto the system. With the appropriate tagging system and tag analysis services, they can see – in real time – who is using what, which parts of the application are causing issues, which parts don’t get touched, what their customers are requesting and on and on. As a rough guide, tag clouds could provide an instant picture.

If they’re smart, SaaS vendors will use services like GoogleMaps to capture geo-industry information as they start correlating clusters of information about end customer adoption habits. And I’ve not even started to think about what else might be possible.

This puts the SaaS vendor in a unique position. On the one hand, they have near perfect insight into how their services are performing while they have the opportunity to develop intelligence services for their accounting customers. Their claims will be trusted because,with the appropriate audit processes in place, they will own the best information a market could want.

Partners in firms, looking to develop their marketing strategies, will come to see this information as valuable to helping them understand how well they are penetrating chosen markets. How best to optimise audits. That might for example mean advising clients to do year end date changes so that audits can be clustered and optimised. That would allow development partners to easily collate information about their clients as groups. Identifying common issues in compliance perhaps. Seeing warning signs for local industry. Gaining insights into issues where HMRC could mount attacks.

Think I’m crazy? Think again. It’s already happening.

Niel Robertson says in comments to a post by Vinnie Mirchandani:

That’s why Oracle is stuck spending a couple of years trying to determine the best of the best requirements and why I need to spend 1/2 my time in Q3 on the road talking to Newmerix customers.

Jason Corsello (hat tip Vinnie) points to benefits for HR professionals:

The ability to mine that data and identify industry trends, practices, and key success elements strengths the value proposition and showcase how HR can actually affect the two key metrics of any business: revenue generation and cost containment.

This raises interesting questions. IDC, long held as the senior analyst organisation delivering quantitative statistics for the IT sector is rendered irrelevant. They could take an audit role. Who knows, IDC might become a content aggregator.

Other mainstream analyst groups will be faced with similar issues. Increasingly, SaaS vendors will drive a wedge between themselves and incumbent on-premise vendors. SaaS vendors will not have the research costs with which their competitors are saddled. Who knows, software bloat might become a thing of the past.

One final thought. What does this do for IPO and post-money SaaS valuations?

Technorati Tags: competitive intelligence, Gartner, Google, IDC

Tagged as: Cloud Computing/SaaS