“Software is eating the world”, said Marc Andreessen in his famous post ‘Why Software is eating the world’. The new adage is, “SaaS is eating Software.”
My 10-year old sister asked me how do I earn money? I told her I earn money by selling SaaS. She understood most of the sentence except for the word “SaaS”. She asked a follow-up question - “What is SaaS?” This took me some time to explain.
Here is what I told her - ‘Taking classes via an App on your dad’s iPad whenever you feel like by paying a monthly fee is SaaS vs Paying an upfront yearly fee, going to the school after fighting with your mom every day and sitting in a boring class taught on the blackboard’
What is SaaS?
SaaS - Software as a Service, is a business and delivery model in which software is licensed on a subscription basis and is centrally hosted.
Business model - You are no more building something and selling it once. Instead, you flip it, you are building something once and selling it forever in the form of licenses.
Delivery model - You can build updates seamlessly and improve the product using real-time feedback.
Subscription basis - You can offer the flexibility to pay as per usage on a monthly or yearly basis. Customers can cancel whenever they do not want to use the product. It is a win-win for both the customers and businesses.
Centrally hosted - The application is hosted on the cloud and can be accessed from anywhere and anytime.
Year after year, an increasing number of businesses are beginning with a SaaS model because of the ease of business it offers. Gone are the day of buying a windows CD :)
SaaS is customer-centric
In SaaS, the customer is the king - truly! They can use the features they want, the duration they want and cancel at any time unlike in traditional business models. The risk is less for a buyer as they are not paying a hefty amount for the perpetual license. This model truly gives the power in the hands of customers and businesses a great responsibility to not only offer a great product but an equally good after Sales service as well.
Let’s look at a couple of the most relatable examples of SaaS businesses around us:
Netflix - You spend a lot of time on it. Unlike the traditional CD purchases here you pay a monthly subscription and get access to a ton of content. The content is delivered using the cloud infrastructure on the device of your choice. You don’t have the restriction of owning a CD player or being at home to watch the content. If you don’t like the content on Netflix you can cancel the subscription but if you do not like the movie you cannot return the CD.
LinkedIn - Yes and No. No, when you use your profile just for networking. If you use a LinkedIn Premium Career Plan license, then yes, as you are paying a subscription fee every month. You can cancel it anytime once you are done with your job search.
Here are some more examples:
Pioneer in Indian SaaS ecosystem
Sridhar Vembu is the pioneer of SaaS in India. His company Zoho has built a platform that has more than 45 SaaS applications and 50million users.
The Zoho Universe (credits: Zoho)
Here is my favorite ZOHO video, which speaks about being a truly customer-centric company -
Exciting News
I’m launching a book - SeSaMint-Guide to Selling SaaS co-authored by Rajan, Partner at Upekkha and I on May 20th. We are offering 20 copies of the book at a discounted price, reply to this email if you would like to receive a copy.