From the Valley…
This morning I listened to Steve Cakebread, new CFO at SVB client Xactly and the former CFO at salesforce.com. The webinar, hosted by OpSource, was titled, “SaaS and the CFO”. Steve has some great insight and perspective into the world of SaaS (software-as-a-service) given his background at SalesForce and current position at Xactly, but wasn’t a whole lot new. The points for employing a SaaS solution into the enterprise are pretty straight-forward:
- Total cost of ownership is lower compared to a traditional enterprise license model;
- Implementation time is faster;
- The buyer gets to test-drive without a high up-front cost or time commitment;
- Access to upgrades and revisions on a real-time basis; and,
- It’s easier to correct bugs and push out upgrades across a multi-tenancy platform than a single-instance application.
There were a couple insights that I hadn’t considered before regarding SaaS, although they do make sense if I had really thought about it:
- Steve suggested that SaaS companies invest more heavily in security of their online applications than an enterprise might. For this reason, it might be that a SaaS offering is actually more secure than a traditional license software run over the enterprise network.
- We’re all much more comfortable with SaaS today than we might think. He noted consumer use of Amazon or Expedia as SaaS applications that we all use today. Users are comfortable navigating drop-down menus and transacting over internet applications, which are the strength of SaaS.
- A $30.0 million run-rate SaaS company is really much larger than a $30.0 million annual revenue perpetual license company. Because of the predictabilty of revenues, you can trust that the sales level of a SaaS company as much more predictable.
I’m sure there were other nuggets I missed, but I think the above captures some of the main points.