In any legacy enterprise organisation, SaaS seems to be the next big thing. Why not? The lure of higher gross margin that SaaS offers can entice any leader of a free market organisation.
Buzz around SaaS
Web 2.0 brought SaaS into our lives in a big way. Google, Facebook, Amazon, Zomato/Swiggy, Uber/Ola and Whatsapp became integral to our lives. Expectations from our personal lives spilled over to professionals - expecting a similar seamless and delightful user experience from enterprise products. And then we got the likes of Slack, MS Teams which closely replicate the experience of B2C SaaS.
But why is every enterprise business leader behind SaaS?
SaaS is not just a delivery model. It is a mindset - of delivery managed and self-serviceable softwares to the end user. Self-Serviceable means a reduction in sales/support resources required to service a customer i.e reduced RnD cost - higher GM. Large portion of the market is also expecting SaaS because the burden of management(upgrades, security fixes, etc) is pushed to the software vendor, helping customers save maintenance cost.
So, does SaaS guarantee success?
Momentary success, maybe. But SaaS alone almost never guarantees sustainable business. Why? Because building features is a given. Yes, someone may do it really well, but who is stopping competitors from replicating the experience? Look at Amazon and Uber - the pioneers of e-commerce. Today, as an end consumer it is hard to identify the difference between them and other top players in any market, just from a digital experience perspective.
SaaS-only eventually becomes a feature play.
SaaS+
Ecosystem
Covering a part of the value chain is not enough. Building deep expertise in a core area may also not be enough, unless it cannot be replicated. Covering adjacent use cases, whether B2B or B2C helps on two fronts:
Customer/Consumer covers more of her use cases on one app/screen/digital experience.
As a business, it gives you the opportunity to cross-subsidise/ cross-sell.
Examples:
Microsoft: OS, productivity suite, Gaming
Amazon: Shopping, Payments, Entertainment
Services
Enterprises often look for solutions rather than a product, specifically in areas where they do not have expertise. For example, an e-commerce company looking for a cloud management solution rather than a cloud management product. Solution here involves domain experts, with 10-15+ years of experience architecting solutions for organisations.
Even for B2C, Amazon e-commerce is a good example of services play. Their post order experience - notifications, delivery, returns and replacements are hard to beat.
Network
That is how Facebook remained unbeaten for so long. Because all our friends and family were there. While the new generation is starting with Insatgram/Snap, the “Facebook generation” may never truly leave the platform.
This is how Slack entered the market - getting small teams at SME to use the product for internal communication, till the whole organisation gets engulfed in the Slack world.
Data
Google has maintained its monopoly status through the SaaS+Data strategy. Relevance of search results on the search engine or Youtube is hard to beat. The more we use it, the more it learns. Amazon ads are also making good use of or shopping data.
This is also true for enterprises. Think Confluence - the number of strategy documents created in the ecosystem. Any business leader would think twice before moving away.