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State of SaaS
18 February 2014
Bjoern Lasse Herrmann Small Business Summit
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Good news
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First successful SaaS Players
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The combination of SaaS, cloud services and mobile “has the
potential to topple nearly every major enterprise software incumbent.”
- Scott White, Andreesen Horowitz
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Easier than ever to launch a great SaaS product
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A lot of funding is pumped into Saas
Nearly half of SaaS startups are funded
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The SaaS market is growing 3x faster than software
7% Software
18% Cloud
20% SaaS
Source: Gartner, 2013 !
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Growth will continue throughout the decade
20% growth forecast through 2020
Source: Gartner, 2013 !
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Global markets
$10B N. America
$3.5B Europe $1B
Asia
Source: Gartner, 2013 !
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Salesforce is a shining star +30% growth in 10 of the last 12 quarters
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But
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The SaaS pool is still very small
Less than 6% of the overall software market
$2,700B IT
$326B Software
$131B Cloud
$17B SaaS
Source: Gartner, 2013 !
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Everyone wants in
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Saas is very Competitive
Half of SaaS startups either are choose growth over profitability
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The SMB market is fragmented
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And crowded with competitors
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Scale is hard to achieve
Less than 7% achieve 10k users
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Distribution is the #1 challenge No existing distribution ecosystems
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Companies rely on direct sales
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With small sales teams
Only the largest companies have teams
of 5+
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And without marketing funds
Only the largest companies pay for advertising
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So companies fight for turf
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And push from SMB into lucrative
enterprise markets
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Aiming to join the SaaS leaders But is this really the competition?
$20-25B market cap $5-20B market cap $1-5B market cap
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This is who really dominates Most SaaS revenue comes from industry titans
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This is David versus Goliath Except the David’s are fighting each other
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Why do Goliath’s dominate?
They may not be as nimble, but they have the support of a whole distribution ecosystem
Technology
Resellers Channel partners
Consultants Licensed trainers
System integrators
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Enterprises have deep needs SMBs change software after reading a blog post Enterprises require a change management plan
Integration Security Training
Data portability Long-term
viability
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The best product does not win The best distribution does
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So how can the Davids beat the Goliaths?
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Start with the right segment CRM is fastest growing enterprise market
SaaS still only 40%
Source: Gartner, 2013 !
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Start with the right technology
Mobile is new for Goliaths
Web is accessed
27% more on mobile than PC
Source: Gartner, 2013 !
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Start with the right channel Partners are 10x less expensive than other channels
Strength in numbers
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Cross-sell Not just for additional revenue
But to build distribution networks
Consultants
Licensed trainers
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Scale fast, build a platform Worry less about product, more about distribution
3rd party APIs stabilize and feed Salesforce
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Band together Channel partners increase distribution
Stability & portability increase attractiveness to enterprise buyers
Consultants
Saas Companies
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Alone The Davids have a hard time to Compete
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