I am happy to announce that I will be speaking at the Softletter SaaS University in Chicago June 30 - July 2, 2009. I am also penning a two-part article for the Softletter publication leading up the SaaS University event, and those articles will come out in the May 15 and May 29, 2009 issues. My topic will be "SaaS Multi-Tenancy: The Business Case" and it seems the timing of this couldn't be better.
Over the last week, a lot of talk about Multi-Tenancy in SaaS, and more specifically the use of it as a differentiator in marketing by Salesforce.com, has sparked some interesting conversations between Jeff Kaplan, Phil Wainewright, and Bob Warfield. I agree with all of their takes, but I would say that ultimately, even within their very thoughtful posts, Multi-Tenancy becomes a red herring, especially when the discussion drops to the technology level. Kaplan's take, by the way, that Salesforce.com is bringing this up to fend off attacks by legacy players entering the market with single-tenant products, is spot on, in my opinion.
Jeff Kaplan did, as he does every time, a great job of keeping the discussion at a high level for non-technical folks with his "condo" analogy. I think the conversation should be somewhere in between Jeff's and Bob's. This is software, there will be a tinge of technology speak involved. But, like any good technology decision, there should always be a business driver. So when I say that Multi-Tenancy is a red herring, I am referring to the technical issues of Multi-Tenancy and to a certain extent the term itself. What we as SaaS vendors need to be selling is the value of our product;, the pain-reducing, revenue-accelerating, world-changing value that our Software-as-a-Service application brings to our target market. Nothing else matters.
The fact is, customers do not care about Multi-Tenancy, just like they don't care about SaaS or Cloud... they aren't using your system because you met the buzzword quota. They are signing up because of the value you bring. In fact, many SaaS vendors have been lucky as those customers with the worst pain sought them out and were able to ascertain the value they provide even though the could not actually convey that themselves. These SaaS vendors will need to change their messaging and positioning if they want to continue to grow.
I can hear you saying "Okay, so Multi-Tenancy has a business value, we just aren't allowed to talk about it?" Correct. Extending Kaplan's "condo" example further, when a Realtor has a list of selling points for a condo, where on the list is "all you are buying is a 'cube of air' attached to other 'cubes of air'?" It is probably not on the list at all. To move units, it is critical you sell the value that the tenant gets because of the fact that they are in a high-density housing unit. In fact, if you draw too much attention to what a condo really is, a stand-alone house can start to look more attractive. A good example of this is customization. Sooner or later it is going to occur to the buyer that they cannot customize their condo the way they could a single-family residence, even if they would never want or need to.
So in my SaaS University session we will examine how SaaS vendors should use multi-tenancy to monetize beyond the application, streamline sales & implementation, and gain and maintain competitive advantage. We will talk about the reasons to build your SaaS application in a Multi-Tenant environment, how to use that to maximize and accelerate revenue, and improve customer service, all without "selling Multi-Tenancy."
See you in Chicago!
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Author: Lincoln Murphy