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Fifteen Great On-Demand Tools for Your Small Business

I am lifting this list from the Seattle Tech Startups discussion thread because this response from Ksenia Oustiougova is too good not to share broadly.  Ksenia runs a great company here in Seattle called lilipip! that does animated marketing videos.

Here is her list in response to the question of "what tools do you use to manage your personal workload."  Her answer is a great snapshot of the tools used to run a small business and an example of how any company can access a wide variety of really great products on-demand and at relatively low cost these days.

1. Project management - Basecamp
   
2. CRM - Batchbook
   
3. Documents (signing contracts) - EchoSign
   
4. Docs automatically stored if sent by fax via eFax
   
5. Invoicing - Freshbooks
   
6. Taxes - OutRight
   
7. Operations (manual, overseas VPA's, etc) - Google Docs
8. Scheduling - Google Calendar
9. Voice - Google Voice
10. Newsletter - MailChimp 
11. Birthday/Thank you cards - Plaxo
    
12. Conferencing - Skype
    
13. Video management/hosting/tracking - Wistia
    
14. Money transferring (anywhere in the world) - Xoom
    
15. Sending huge files - DropBox and YouSendIt

This is a great list.  I think I'd add a few like a blogging platform (Typepad or Wordpress), a wiki/collaboration space (like PBWorks), and various Twitter tools (like Tweetdeck & CoTweet) as well as the fact that you can address all your email needs with Google Apps.  Other adds would include marketing specific items like PRWeb for press releases, Jigsaw for lead generation/list building, and, of course, Gist for personal relationship management.

Global on day one

International expansion use to be something that occurred methodically or, at the very least, intentionally.  Build some momentum and success in a domestic market and then look to other countries and regions to expand into with your goods or services.

On-demand software available to anyone who has an internet connection and a web browser has dramatically changed this approach.  You are global on day one with users around the globe, speaking different languages, and operating on different time zones.  The service/support side of the equation becomes even more important as you quickly learn (again) what works at home does not always work abroad.  Learning these lessons out of the gate rather than on your schedule can come as a bit of a surprise and many of the issues you thought could "wait" become burning.

The exhilarating part of all of this is that you do get a truly global customer base immediately and are able to connect and interact with folks all over the globe without spending huge amounts of money or going through a 3rd party.  

Sales is implementation in a SaaS world

There use to be a saying in the world of enterprise software vendors - "don't confuse sales with implementation."  Ah yes, those were the days when you could count on tasty perpetual software license revenue and systems integrators grew on the fat of the 8:1 ratio that existed between professional services fees and software license fees.  You had to spend that much more just to make the software work for you.  Hardly seems right...but that was reality.

Good times for vendors and SIs, not so much for customers.  Well, now the leverage shifts and the customer not only expects short time to value but demands it.  No more servers to configure, software to customize, legacy integrations to engineer....or are there?

The bar is high if you are aiming to be an on-demand enterprise (or just business) software company. There still is customized workflow (and always will be) and integration to legacy systems will never go away.  The trick is to orient your company around that fact that functionality is important but implementation gets the renewal...and in a SaaS world it's all about the renewal

Headed to Pacific Crest Securities Emerging Technology Summit

in San Francisco tomorrow - Thursday, Feb 26 for the on-demand portion of the conference.

This was a great event last year and I am fortunate to be attending again this year.  If you are going to be there, drop me an email and we'll connect.  I'll take some notes and post the highlights...

Getting some (virtual) ink

Yours truly got some coverage with an article in destinationCRM out today.  Here's the link to the article "Want SaaS? Get Integration First."

Awareness to Advocacy (A2A)

While attending the Software Business 2008 conference last week, I sat through a panel discussion by a few venture capitalists entitled "SaaS Steps Up to the Plate."

One of the participants was Gordon Ritter of Emergence Capital and he mentioned the title of this post during the discussion.  "Awareness to advocacy" is a key component of growing and scaling a SaaS company according to Gordon.  Essentially this is nailing the process of having people hear about you, trying what you have to offer, and then telling someone else about it.  This is consistent with traditional approaches to building a pipeline of targets and then making them loyal customers over time.  The difference with an on-demand model is that you can quickly reach a wider group and more immediately get a product in their hands to use and share with others. 

He also talked through the need to be focused on unit economics.  Meaning, how much does it take to acquire a customer or how much do you make on that customer over their lifetime?  Target 2-3x the annual subscriber fee to acquire a customer early on with it ramping down over time to 1 to 1.

Dominant ERP vendors struggle with making SaaS work

Here's an interesting article in InformationWeek covering an interview with SAP America's CEO Bill McDermott on the business prospects for SAP going forward and a few broader trends.  Outside of a rather somber outlook for enterprise software spending, he does take an interesting stance around software as a service and that the whole notion of on-demand computing (and its Business ByDesign product initiative) is incompatible with their business realities (my words, not his).

"It's not that SAP doesn't support the trend toward cloud computing -- it just doesn't see how it can operate a so-called cloud and bring good returns to shareholders."

Not as blunt as Lawson Software's Harry Debes' comments about perpetual software licensing being like cocaine but along the same lines.

Meanwhile, Aravo Solution's recent announcement about being selected by GE to provide a supplier information system for 500,000 suppliers across 100 countries illustrates the other side of the equation where a newer, more agile SaaS company is able to land a significant enterprise deal.  Here's THINKStrategies' Jeff Kaplan on that announcement.

SaaS/on-demand/cloud models are tough to swallow if you are use to doing business on a perpetual license /capital expenditure basis.  Regardless, I still believe that delivering software on-demand is a better deal for the end enterprise customer although not necessarily for the industry incumbents that have built their businesses on licensed and installed software.

A SaaS contrarian taken to task

The smart folks over at Appirio have posted a direct and pointed response to Harry Debes' comments about SaaS being a passing fad as my previous post highlighted.  One of my favorite parts:

"When the sunk costs have been fully depreciated, customers effectively run the software for free." Yeah, right. This is a shocking lie - unless Debes and on-premise software companies want to stop collecting maintenance payments from customers. Tell on-premise customers who have had their maintenance fees raised without warning, or had a running product suddenly characterized as "end of life" because their vendor was hungry for an upgrade, that they're running software for "free." The even greater cost is the lack of business flexibility these rigid systems empart on their customers.

Read the whole thing.

A SaaS contrarian

Here's an interesting Q&A with Lawson CEO Harry Debes (picked up via deal architect) proclaiming a collapse in SaaS hype in a couple of years.  It is an interesting read and a compelling counterpoint to the hype and excitement around "software as a service" delivery models.

His perspective is based on essentially seeing this type of thing before as "service bureaus" or "application service providers" in previous incarnations that failed to deliver as promised.  Also, he takes a shot at the time to profitability for this type of model.

No doubt that the economics are different from a perpetual model that provides cash up front and a maintenance stream to get fat and happy off of over time.  Incurring an upfront "dip" to acquire customers and using a monthly subscription fee to plane up to profitability is very different indeed as is how to value multi-year contract backlog. 

But what about enterprise customer fatigue with the old model where swallowing such a huge capital investment for software and then hoping for the payback often led to disappointment?  Hasn't doing what is most appealing to the software provider given way to what makes the most sense to the enterprise and allowing them to consume software on their own terms?  Maybe SaaS is a passing fad but enterprise software consumption and delivery models are changing and will continue to evolve. 

Software vs. service delivery

I had breakfast with a good friend the other day and we covered a wide range of topics including this one - the difference between software product companies and service delivery companies. 

Service delivery companies use technology (their own or 3rd party) combined with some type of service or expertise (supply chain, brokerage, billing, payroll, ediscovery, etc.) to deliver value to their customers.  Those customers appreciate the technology being used because it enables the service but the technology "product" itself is not the star of the show.  Sort of like an iceberg in that what you see above the surface is a fraction of what is really there. 

Making the change from service delivery to product company can be dicey because all those customers that love you for your service and expertise may not be the same ones ready to embrace your product platform and roll their own as they may lack the resources, in-house expertise, or desire to do it themselves.  The path the other direction is not as perilous but still means rethinking your target customers and distribution channels as well as the impact on valuation.

Also interesting was a discussion of market dynamics and how winners are different in service delivery vs. product markets.  Product markets end up with 800lb gorillas who dominate.  The goal of any product company is to get that momentum and "win" the category.  Service delivery markets are defined by kings vs. 800lb gorillas.  These are definitely dominate players but there is still plenty of room for others as the expertise and service of the company can serve to differentiate them from even the largest player.

Software-as-a-service (SaaS) is the intersection of service delivery and software product where, in some cases, products alone work while in others it is the combination of software plus services that will define the future winners.