SaaS for ICM – A Q&A with Jeff Saling
I recently met with Jeff Saling and we talked about how SaaS is impacting the ICM landscape. We had a great discussion, more of a Q&A. Here is the first half of our discussion.
Jeff Saling specializes in SaaS (Software as a Service) transition for on-premise enterprise software companies seeking to enter the SaaS (or Cloud) service delivery arena and delivers talks and seminars on the subject. He has been successful in building and managing Callidus’s enterprise class SaaS solution which now has over 150,000 subscribers in 135 countries.
AD – What do you think is driving the rapid adoption of SaaS in enterprise?
JS – I think it is two things. Firstly, it is easier to deploy and manage. Customers can sign up and start using it right away and it is easier for them to engage with it and if it is not working for some reason, they can easily disengage.
Secondly, the economics of it are very strong.
The SaaS folks have conquered most of the issues over the past few years. That said, the ease and the cost have now become primary drivers.
AD – Can we say that the advent of SaaS has increased the adoption rate of the ICM packages?
JS – I think so. It has allowed people to come off spreadsheets and try SaaS vendors for ICM much more readily than they would have if they had to buy a package and install it on their own.
AD – So no more of the million dollars budgets and expenditure….
JS – That is correct. The minimum entry fee, 5 or 6 years ago was nearly 7 figures, maybe not in every case, but, by the time you buy software, hardware, service, do the installation, get the project running, debug and get it up and operating, you are talking about a serious amount of money, in scale with whatever your business is. Now you can turn to a SaaS vendor and get something up and going in an almost self- serviced manner. You would end up paying as low as 10-15 dollars at the low end and 80-90 dollars at the high end per user or subscriber. So the pain and risk to enter has substantially been lowered.
AD – I remember from my Xactly days, that the SMBs were starting to look at the solution because it was so much cheaper than the on-premise option. That brings me to my next point on SaaS maturity. Xactly started as a pure SaaS vendor and a lot of the other vendors migrated from an on-premise version to a SaaS. Do you think other packages have matured enough or do they still have some ground to cover?
JS – From a customer perspective, they have certainly caught up. It is more a question of fit – what you are trying to do as a customer and does a vendor do that as a specialty? Xactly aimed at SMBs and vendors like Callidus, where I came from, aimed at the enterprise class market. The technical challenges were probably a little harder, there was more data coming in, more complicated rules etc. So the expectation is that maybe it’s a little bit harder to get started with an enterprise class solution but it’ll handle more complex problems. On the other side, if your problem isn’t that hard, do you really need an enterprise class solution? So you see, it is more of a fit issue.
AD – I guess, it would be fair to say that when it is an enterprise class solution, the customer is probably not looking at the cost so much but rather outsourcing the infrastructure and for the SMBs it is really about the cost.
JS – The cost always plays a factor and you’re probably right that it plays MORE of a factor for the SMBs. But then on the other side they do not have as much leverage as the big companies when it comes to pricing. They are probably bringing a 100 or so users to the party whereas a big customer is bringing several hundred or thousand and has more leverage on per person pricing. Even if the complexity is higher, you may end up ultimately paying less for a more enterprise class solution just because you have so many users.
AD – A lot of on-premise customers are considering the move to hosted SaaS solutions. What should they take into account while going that route?
JS – Firstly, they do need to pay attention to data security. You are moving your data from your premises to the vendor, so you want to make sure it is well protected.
Secondly, the transportation of that data from your servers to the SaaS solution has to be considered. In case of SPM, you have to move your transactions, your company sales information, information about people being paid, so you need to consider how that data gets integrated as a part of the project scope. You need to make sure that you are not giving up ownership rights to your data in the course of transferring it to the SaaS vendor. Not many SaaS vendors would claim ownership of your data but there are some who may.
And then the normal procurement details like are you getting a good price, the right terms, good SLAs, support and penalties etc.
AD – So SaaS is a ‘can do’ for almost anyone and everyone these days.
JS – Most certainly. I think maybe 5 years down the line, we would be talking about SaaS as the default solution and on-premise as the exception rather than the other way round.
AD – How did the SaaS transition occur at Callidus?
JS -The way that it occurred at Callidus was that there was a group of us that was asked by our CEO to come up with a way to improve the topline of our sales. Callidus had been very successful at selling enterprise class ICM solutions to the biggest companies in the world. We didn’t do a great job to get in the SMB market. Also, we were not getting a penetration in industries like Pharmaceuticals who did not want to own the technology and the middleware that they needed to get. So we decided that we needed an on demand solution for these segments. It was a very conscious decision to go after that market.
The growth in the enterprise segment for ICM for SaaS was much bigger than the SMB space. You can bring on many more customers in the SMB space but there is many more dollars in the enterprise market. But we did business in the SMB space and we are proud of it. And I am glad that both, the company and I did it.
This concludes part I. Watch this space for the 2nd half of our discussion..