Why is it difficult for software companies to transform into SaaS?

There are also many software companies that regard SaaS business as a sideline. For customers with standardized needs, they sell SaaS; for customers with personalized needs but rich, they sell projects.

So far, I have never seen a SaaS company that can do this.

Software and SaaS look similar, but in fact they are two different things, or in other words, two different businesses. I often joke with friends Afghanistan Phone Number who consult on transformation: instead of the burden of transformation, it is better to start a SaaS company all over again.

In fact, there are too many differences between the two to list them all. I have briefly arranged the main feature differences in the following table.

Business process differences

The software business process is short, and the sales contract and collection are over (the subsequent implementation and maintenance are all additional services).

In the business process of SaaS, until the end of the customer life cycle, customer acquisition, implementation, and operation are all essential core businesses.

In the software business process, sales are the most important driver. In the SaaS business process, sales + customer success is the main driving factor, and the focus is on customer success.

Profit point difference

Afghanistan Phone Number
Afghanistan Phone Number

The profit point of the software is mainly concentrated in the one-time income after delivery. The profit point of SaaS is N, that is, in addition to the ACV in the first year, the annual renewal and additional purchases (expansion) are the bulk of the income.

The shape is similar but not the spirit, that is, if the transformation is not complete, it is better not to change.

The external model of SaaS requires internal transformation and cooperation, otherwise the operation will stumble and step on the pit.

For example, the two most frequently asked questions to me: one is the issue of pricing, and the other is the issue of channel agents. These two aspects were originally the strengths of soft companies controllable.

What to do after the transformation? Let’s talk pricing first .

The textbook pricing method applies only to software, not SaaS. The pricing method of soft enterprises is mainly based on functions, modules, features, etc. In fact, these have nothing to do with users, so the pricing customers are not easy to accept. Currently, the best pricing method for SaaS is the Value-Based Outcomes (VBO) pricing model.

Speaking of channels .

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