10 Predictions for the Future of SaaS and On-Demand Software Applications

Market Strategy Trumps Technology; Product Integration and Alliances Amongst SaaS Vendors will Drive Adoption, says founder of On-Demand PPM vendor Innotas

Market strategy will trump technology in determining which SaaS (software-as-a-service) companies will be successful, while the key to driving adoption will be better product integration and alliance with other SaaS companies, according to Demian Entrekin, founder of on-demand PPM provider Innotas (www.innotas.com).

On-demand, or SaaS solutions are far less expensive and quicker and easier to implement than installed solutions; they are 100% multi-tenant and are extremely easy to maintain; can be deployed in days or weeks; can be rolled out on an executive, program and team level to internal and external teams; and are highly adaptable with ability to add or delete seat licenses to correspond with fluctuating business needs.

Entrekin recently identified 10 key trends that SaaS companies should think about as they work toward driving growth and adoption of on-demand applications in the marketplace:

1. It’s the product, stupid!: Due to the emphasis of “Try It Buy It” approaches for marketing SaaS applications, product management and product marketing teams are forced to push more of the “whole product” and “solution selling” concept back into the product itself. Instead, developers should focus on incorporating business process into product features.

2. Software without borders: Applications are becoming less and less restricted to a particular organization and more oriented around user networks. This has the effect of making the applications more user-centric rather than organization-centric. Paradoxically, this is good for the organization since it will lead to better adoption.

3. First impressions, first: SaaS applications have a few minutes to make an impression, and the first three minutes are critical. If you can create a sense of value in 3 minutes, you’re off to a great start.

4. Pinching pennies: COGS and Gross Margins are financial metrics that should drive the technology strategy; as Deming might have predicted, the ability to support a reliable, scale-able service at a low cost is becoming a bigger and bigger advantage.

5. Tier 1 support reigns: Now that there is less and less room for fancy, high priced consultants to answer the fancy, high priced questions, Tier 1 support will take on a bigger and bigger responsibility to represent the company and answer tough questions during the sales cycle. Will a good FAQ cut it? We doubt it.

6. More product alliances: SaaS vendors will dedicate more resources to integration partnerships with other SaaS vendors. Right now, they talk about it but they don’t do it very well. Alliances may be the key toward gaining some share of the elusive “channel” for SaaS vendors.

7. Video trumps text: SaaS products will begin to use more and more video for training, support, documentation, etc. It’s cheap and easy and more interesting to look at. Text based tools are being replaced by A/V.

8. SaaS for SaaS: SaaS companies are going to start outsourcing more and more parts of their own operations. This is important because they can get the same kind of leverage from full service hosting providers that they provide to their customers. These kinds of arrangements will also lead to natural SaaS aggregations of applications into end-to-end partnerships.

9. Grid computing muddle: Utility computing remains an open question and will be driven by the cost to provide the service. In some cases, you may be able to get your monthly operating costs per user down to a low enough price that grid computing won’t offer enough of a benefit. In other cases, it might provide just

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