Integration and Expertise Matter More for SaaS
Posted by Bob Warfield on April 29, 2008
I recently had lunch with an executive one of the more successful SaaS startups in the Valley. Our conversation ranged far and wide over many topics, but eventually I wanted to understand their product differentiation. There are several players in the space, what had these guys been successful in emphasizing?
The answer was a surprise to me: integration with other SaaS apps. As he put it, “Our customers care a lot more about this than they used to when I worked for a perpetual software company in the same space selling to bigger enterprises.”
This was completely at odds with my logic before the lunch. SOA and fancy integrations had seemed entirely a feature that catered to giant Enterprise IT that had to have things their own way and were willing to boil the ocean to get there.
After a bit of further questioning, it became obvious why the SaaS customers might care even more than their big company counterparts. SaaS typical sells to SMB’s. These smaller organizations have minimal IT staffs. I once talked to a SaaS company whose professional services group had to deal with the CFO being the only IT staff that could answer questions and help get the software going. That’s small!
When you have a large IT group, you can afford to, and indeed, may even want to dedicate some of them to building the integrations. When you have a small group, if the vendor can’t do it for you, it probably won’t ever get done. So it isn’t that the little guys care more, they’re just helpless to get any kind of solution if they care at all.
What does this mean for SaaS vendors? In this case, having out-of-the-box tight integration with other SaaS vendors (or On-premises packages) was a big differentiator. It lowered the deal friction (less to worry about on the custom install side) and increased customer satisfaction (hey, we could never get these two systems to talk before!).
Today, I read in one of Jeffrey Monaghan’s posts the following:
It is important to be viewed as the expert when you are selling a product…but it is imperative when selling a service. Customers are buying a promise from you. And an expert is perceived as someone who is most likely to deliver. Everything you do should scream “We’re experts!” Collateral material, websites, even the way your sales team dresses.
Jeffrey is making a slightly different point than the integration point, but it’s really the same story again, isn’t it? Small businesses can’t afford to hire Accenture or somebody to come partner with their software or sevice vendor to help them out with “Best Practices” or “Business Process Re-engineering.” The software itself had better have all that built in, and the vendor had better look like the experts, and be prepared to help educate the customer as much or as little as needed. It can’t be an extra cost option.
This is just another thing I really liked about how Rally Development’s web site is set up. There is that perfect mirepoix of product marketing, best practices (and in their University, clearly there’d be experts there!), and community. Rally is just a site I came across by accident when two different people asked if I knew of them. Their site really resonated with my idea of what a small company should be doing with the web to get the word out.
How about you, are you the experts in your area? Shouldn’t you be?