Intensive thinking, continuous refresh. To do business services and the SaaS industry, we must have a determination to fight a long-term battle, but also to deepen and think more.
Editor’s note: This article is from WeChat public account “小哈公社” (ID: InweTech), author InweHub Xiaoha.
“Laziness is the biggest inferiority in human nature.”
There are many ways to adapt to human nature. Summarizing and refining a set of ideas that sounds clear and easy to understand can always be widely disseminated. At the same time as being regarded as a standard, most people will be “lazy” and give up the logic or objective reality behind the deep thinking.
It is impossible to clarify the “real intentions” behind the people who put forward the opinions. But if you give up thinking, it will easily become the “Utopia” written by the writers, and will be “utilized” with the big stream.
Introduction, continuous refresh. To do business services and the SaaS industry, we must have a determination to fight a long-term battle, but also to deepen and think more.
The following are some common ideas about SaaS. If you think deeply, it seems to be “wrong”?
Viewpoint 1: Big customers get the world
About 3 years ago, the well-known partners who led the first batch of toB investment projects in China made a bold prediction: The SaaS market is the world’s largest customer.
In a capital market, if there is a SaaS company that needs financing, one of the most frequently asked questions is that there are not many big customers, what is the proportion of revenue?
It is a key reference factor for VCs to decide whether they can be accepted by large customers and maintain a certain percentage of large customers. The reality is not so optimistic.
Is this sentence wrong? What’s the problem? The reason why SaaS companies can’t grow is because they can’t win big customers?
No need to make a statement about right or wrong. Looking back at the historical background, the Jingwei investors and the first pioneers of domestic SaaS made the above judgment after examining the successful toB companies in Silicon Valley, such as Salesforce and Workday.
Reviewing that time, including until today, most of the SaaS companies in the United States with successful IPOs are indeed supported by large customers in terms of revenue structure.
Consider this context and context, this sentence is true, but the point of view is easy the person being heard misinterpreted.
Review the development history of these companies before the IPO, the initial stage is all aroundAround the small and medium-sized enterprises to develop business, “SaaS enterprise success, from the SME market, become a major customer.“
Big customers have complex and lengthy choices and decision-making processes. Unless they have the ability to face real-world problems in supplier qualification review and procurement budget decision-making, these winged start-ups are fierce. The customer market is basically unrealistic.
Cash flow is very important. If you don’t return to reality, but pay too much attention to the big customer market at the beginning, high customer acquisition costs and lengthy conversion cycles are likely to drag the company down. What’s more, the products of companies that have shown signs of failure in less than a year can really make large companies pay their attention?
Where, there is already a successful Zao-successful multi-product matrix SaaS provider in the market, which is also “Long tail theory” Practice again in business.
So, back to the beginning, is this sentence wrong? How to rethink, I think you must have your own answer.
Opinion 2: Big companies don’t like SaaS
As mentioned above, “big company” has always been the heart of the industry.
A lot of SaaS companies have repeatedly hit the wall when they are exploring the domestic big customer market, and they have begun to declare in the industry that “big companies don’t like SaaS”! Perhaps it was the escaping mentality after being hit, many practitioners also resigned, and the salted fish mentality gave up the logic behind the thinking.
If you look at it, the big companies in the United States actually like to use SaaS. More than 80% of the profit sources of many US SaaS companies are contributed by big customers.
If you go deeper into the analysis, domestic big companies don’t really like SaaS, which is actually caused by the temporary “unable to use or purchase” SaaS.
First, the head vendors in the traditional enterprise service track built a deep enough industry barrier to increase the replacement cost of customer products and services.
From the perspective of large enterprises, because of having sufficient industry profits and market share, a more “safe” and stable development, and building a stable and sustainable supply chain and partnership, it has become the default consensus, and some State-owned enterprises with “administrative” and “social” effects are particularly prominent.
From an economic and cost perspective, companies considering switching SaaS are not necessarily a transactional account, and the reasons are explained later. In addition, based on concerns about risk and data leakage, the core system of the cornerstone business operation is basically difficult to replace.Possible.
The head manufacturer in the traditional enterprise service track has been deeply cultivating the industry and head customers for many years. Even the cooperation between Party A and Party B is in the industry, from interest bundling, supply chain relationship game, department check and balance, service mode, Achieved a relative balance, expressed as a continuous service capability.
The way to break the ground, deepen the depth of the value behind SaaS products, or cut into the market in the new field.
SaaS products can be deployed quickly and flexibly in the enterprise’s business, improve the performance of business frontline and core value departments, or adapt to the rapidly changing market strategy and organizational structure of the enterprise.
The integration with the original information system to meet the front-line running, the support of the middle and the back, the stability of the background, and the company’s “China-Taiwan strategy” advocated now, coincides.
Whether it is adapting to the Internet revolution, or by exporting value to the industry and re-building the industry ecology, SaaS is undoubtedly innate. Coupled with the “cloud” model to promote the transformation of enterprise IT architecture, enterprises are bound to eliminate some of the products and services that do not adapt to the “cloud” ecology, which also brings new opportunities to the entry of SaaS products .
A few years ago, when Salesforce was founded and cut into the market, the application of CRM among enterprises was not popular. And relying on SaaS’s service approach, it quickly promotes this innovative service tool to enterprise users, reducing the threshold for customers to try new tools. If it is today, there are people on the market who will launch general-purpose CRM products, and the difficulty of promoting them to enterprises will be very large.
Also, if you give big companies a new budget and rigid procurement reasons, the product itself has strong innovative tool attributes in terms of service areas, tool attributes, superior technologies, and special functions. .
In fact, it can be seen from the macro data of the industry that since last year, the core users of SaaS have seen a trend of shifting from small and micro enterprises to large and medium-sized enterprises. IDC’s “China’s Public Cloud SaaS Market Report for the First Half of 2018” It is clear that the growth rate of China’s SaaS market last year was eight times that of the traditional application software market.
I believe that in the near future, the phenomenon that domestic big companies can’t use or purchase SaaS will be completely broken. In the face of the big companies that appear to be in love with SaaS, there is no need to be shocked!
The change in market opportunities can only be captured by SaaS vendors who have a strong break.
Viewpoint 3: SaaS mode is more advanced than other modes
The core logic of the market and capital that is very recognized by the SaaS modelOne of the greatest value is to get subscription paid based on time clip by standardizing products or services. A revenue model for corporate users.
The continued growth of revenue and profitability of the company in the future is the final interpretation of whether the market and capital have been and will be correctly selected in the past and present.
Either the SaaS industry, or the rapid growth and future development of our industries in these decades, the core is inseparable from the three key factors driving growth: labor (L), capital (K) and total factor productivity. (A).
The use of any means element alone or in combination will have a marginal effect, and there will be a time window that requires match the current situation.
The success of some SaaS models is reflected in the difficulty of reconciling conflicts between customer customization and product standardization, finding a rapid growth of balance, while the means are growth, revenue, cost, resources, technology, and manpower. In the operational strategy decision-making of products and capital investment, it is in line with the lever balance point of the current situation, and the essence of the core is to produce a combination of elements that meet the current objective situation.
What to say in the sentence, isn’t this the “productivity matching production relationship“?
as in “Why does your SaaS “fail”? As mentioned in , in some industries or circuits, the idealized SaaS advocates standardization, high-quality products and services, and changes the service operation mode to improve the industry’s total factor productivity business model. Because of the special market development stage and objective reality constraints, it is not suitable for the current stage.
The article also mentions the view that MES (manufacturing enterprise production process execution) system products are difficult to SaaS. At present, it is more appropriate to use the labor resources of industry experts.The amount of paving to drive the industry or the company’s performance has increased significantly.
But if you change the angle, is there a more efficient organization of human resources in the industry, or a platform-based approach to matching and exporting expert consulting services to the industry, can it bring different effects?
Viewpoint 4: SaaS is almost cloud computing
Before refuting, let’s take a look at the relationship between enterprise services, SaaS and cloud computing.
Enterprise service is a big basket, which includes traditional services such as enterprise registration, resource docking, office space provision, finance, advertising, etc. It also includes software and information services (office collaboration, resource planning). , internal control, data storage, computing power, etc., as well as providing traditional types of services (such as social security, tax filing, customer acquisition, marketing, legal affairs, online financing, online advertising, etc.) through software or information platforms.
SaaS exports the above-mentioned standardized product services to enterprises through software and information technology, and charges subscription paid based on time clip. Cost revenue model.
These software or information technology, many of which are based on the cloud architecture, or the service itself is sold to the enterprise cloud capabilities, or through the cloud and Internet technology, with the customer’s marketing, service procurement, operation and maintenance support, is Very suitable to take the SaaS model to export to the enterprise.
This is the relationship between SaaS and cloud computing.
The rise of cloud and Internet can make enterprise services more efficient and convenient to promote marketing and expand customers, so that enterprises can enjoy out-of-the-box services. Without the help of cloud computing, the SaaS service model is still possible, and may only require local updates of Internet access authorization or C/S architecture software for subscription mode.
Since 2007, giant Adobe has made a tough decision to switch from a traditional licensed software company to a SaaS business model.
“How can I make innovations faster? How can I get more new customers? How can I create a more predictable and stable recurring income stream?” CEO Shantanu Narain gave The reason Adobe has to transform.
“In order to survive, Adobe must unlock the subscription model. Also, subscription revenues are more predictable and can grow over time to ensure financial security.” /p>
In 10 years, Adobe has become a SaaS with a market value of nearly 100 billionThe company, and in the following time, gradually migrated its business to the cloud and integrated its own ecosystem of more excellent products and user bases through capital acquisition models to avoid the impact from competitor products and models.
And cloud-based SaaS companies, in the performance of the capital market, the market value is obviously much higher.
Opinion 5: SaaS mode can reduce enterprise informationization costs
“SaaS service model can effectively reduce the informationization and cost of ownership of customers.” This sentence has been passed down for a long time, and it is difficult and unintentional to tap the source of this sentence. In any case, many corporate customers have believed, and therefore opened up enterprise services that subscribe to the SaaS model.
The customer believes that nothing is wrong, but the people who do business services and SaaS really believe, it may be a big deal.
There is a flaws in the current resumption. SaaS corporate marketing and service targets are often “smart people” and high-ranking corporate executives “people”. Those “human fines” who can think about the deep stage should have discovered the flaws.
As the saying goes, “Buy is not sold,” but many SaaS sales, regardless of the occasional background, continue to advocate this concept to customers. When you are still passing on the idea to the customer, these “people” do not know how to treat you?
In order to assist some enterprises or information departments in budgeting and purchasing decisions, the traditional ICT architecture combined with the software licensing fee model, in the past will introduce TCO (total cost of ownership) evaluation criteria tools, from the perspective of cash expenditure, evaluation The overall cost of hardware and product services from procurement to post-use and maintenance.
And many SaaS software vendors say that if the number of users is sufficient, the overall cost can be amortized on the basis of more user bases, achieving a service that is close to zero for each enterprise user.
This cost is the internal cost of the SaaS software vendor, and the price of the service is determined by the market and supply and demand. What’s more, in reality, there are many vendors that provide cost-effective operation and maintenance services around the old ecosystem. The original hardware infrastructure will not be quickly eliminated due to cost issues.
“Continuously encourages companies to promote the cloud or purchase SaaS, so that companies pay for the manufacturers but the manufacturers!” Many companies already have such a precautionary mentality. The enterprise can build more Serves and Ability on the unsaturated hardware resources, and further dilute the TCO on the old system.
Therefore, the economyAccount, for a period of time, switching SaaS and not necessarily reducing the cost of enterprise informationization.
Business operations are based on cost, revenue, and investment risk, and measuring various factors before making a final decision. TCO is a simplified evaluation model with his ideal side, often used in isolation, especially for the cost center role department within the enterprise. In some cases, the cost of ownership should not be a factor in the core of the business.
Because of the evolution of business models and the popularity of digitalization, the role of corporate CIOs and informatization departments has undergone tremendous changes in recent years, and has even become a new economic and revenue growth point for many companies, if this time It is obviously inappropriate to evaluate the calculation from the perspective of TCO.
So, if some CIOs are simply considering this, it is a bit “losing” in the format.
SaaS sells services, and software is just a tool or a vehicle for services. Providing special services is the embodiment of the specialization of social and market economy. Only a specialized division of labor can reduce market and social costs, which is also the market significance of many professional outsourcing and subcontracting businesses.
As long as the time is long enough, the procurement of specialized services must be a cost-effective and professional choice for the company. Only in the current stage, the market development needs a certain amount of time to accumulate. The professional service providers in this area are not equal to the status of many medium and large enterprises in the service target, and they do not have the huge price advantage brought by the scale effect.
On the other hand, the service and technical capabilities behind SaaS can bring more value and excess return to the enterprise and the information sector, from the goals of enterprises, executives, individuals, and vendors. And the unified binding of interests, if you can consider and guide from this perspective, perhaps more realistic!
“After growing up, we all became what we hated most at the beginning!”
In other words, once the head SaaS vendors in the industry have the advantages of scale and various moats, get industry data and deeply bind the service targets, will they start to extract more from them? More profit, that is another topic!