Robert Worfield, CTO of Callidus Software, a provider of software that helps companies take action to improve their sales performance strategies, has a valuable article at Sandhill. It is the first reasonably comprehensive assessment on the hybrid model of SaaS and on-premise applications. I was particularly taken by a number f Robert’s assertions. For ease of reading, I’ve bulleted them.
- While some customers prefer on demand or on premise strictly for religious reasons, the vast majority of customers choose a particular software solution based on current business needs, resource allocation and corporate objectives.
- These factors can change with the weather. That’s why buyers can rationalize any purchase decision based on their needs – and that’s why many customers choose both on-demand and on-premise solutions, depending on the situation.
- On-demand isn’t really just a service model. As vendors, the SaaS option allows us to more closely match a customer’s costs with his or her risks.
- In a license situation, the customer pays 100 percent up front and no more once the project is implemented and live. The downside is that if the project fails, all the risk was taken up front and all the money is paid and the business is receiving no value.
- One advantage for software vendors is that with on-demand, we can ensure a successful implementation for customers. In a purely on premise model, it has always been difficult to sell the product and make sure that it is implemented successfully. For on-demand customers, these old days are really long gone.
- In the SaaS model, customers pay and get software monthly. The flexibility matches cost to risk and allows the customer to leave at any time if unhappy. Of course, this breaks new ground for old-fashioned software vendors who now must work tirelessly to ensure their customers are satisfied.
Many nuggets to digest. And when Robert comes to outline the basis of the hybrid model, he is equally eloquent. I won’t spoil the fun by revealing all. The part I could easily have skipped jumped out of the page at me:
In just a few short months, we had our on-demand offering ready for market…the product side was possible because we leveraged virtualization technology in our operating system. The technology…enabled us to offer a hybrid product without the hassle of engineering two separate offerings.
I doubt there are many vendors out there who can say the same thing. OK – hands up all those that can. But seriously, I remember many years ago Dennis Keeling, who did more to organise the European software vendor community than anyone else I know, warned that very few vendors successfully transition from one code base to another. He was right. If your IT base is innovative in the first place transitioning may be a lot easier. This from Callidus 3rd quarter results announcement:
A significant development over the past six months has been the launch and growth of our hosted on-demand offering. Starting from zero, the company has sold multi-year contracts with a total value of $6.1 million over the past six months. These contracts are expected to generate annual recurring revenues of $2.3 million.
Q4 results will be announced in 2 days’ time. Callidus is a $50 million business. Five percent of its business is coming from on-demand. But look at the contractual values going forward! Useful data points for a specialist packaged application prvoder. As an aside, Callidus has a UK operation for those interested in this fascinating corner of the business analytics market as it applies to sales compensation packages.
Technorati Tags: business infrastructure, hybrid computing models, innovation, business analytics, SaaS
