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Fallout from Enterprise SaaS Series

March 10, 2007 Article by Lincoln Murphy

Originally published on March 10, 2007

I have received an amazing amount of feedback on the Enterprise SaaS series; just about everyone who read it has contacted me with mostly positive comments, but usually someone has at least one concern. I am going to try to address all of their concerns at one time.

Hybrid SaaS != Hybrid Licensing Model

A couple of people have mentioned that trying to support a hybrid licensing (or business) model would be difficult at best. I couldn’t agree more. I never intended to support or even condone multiple licensing models.

I re-read what I wrote, and while it makes sense to me, you really have to follow it closely otherwise you could think I am supporting multiple licensing models. In fact, my “Hybrid SaaS” model is a hybrid technology model that is supported by only one licensing model, utility pricing. What I condone is pretty much technology agnostic and relies on the system being able to “call home” to handle the pricing. I think that is the future of the software industry more so than any actual technology.

That said, I think the SaaS delivery model is the future of software. I am definitely pro-SaaS, including Pureplay SaaS. This series was just to let people know that while we as technologists, entrepreneurs, and evangelists have adopted SaaS as the de facto standard for software delivery, Corporate America, as I have seen it, is not onboard with that. Are they changing? Yes. Will it get better? Absolutely. SaaS is just not ubiquitous yet and you must be prepared for that as a new SaaS start-up. In one or two years, these objections may go away completely; you still need to know your customer though.

A problem with many SaaS vendors is they come in and say “we’re a SaaS vendor” like the customer cares. Do on-premises software companies come in and say “our software is written in Java” or “we distribute our software on CDs”? No. And they shouldn’t because no one cares. The caveat with SaaS is that it is actually more difficult (hence the creation of my articles), because you actually need to make sure they can support that type of delivery mechanism.

But what about selling the benefits of the SaaS model? Yes, you need to do this. But it has been my experience that you must do this after you talk about solving the problems of your customers; “Not only can we solve your problems, bring you these value-adds, but also our unique delivery model can save you money…”. If your only differentiation point is the delivery method of your software, that seems rather weak.

Source Code Escrow Questions

I got this response from one reader:

“I liked the idea of setting up an escrow for the source code as an insurance policy for the customer. I suspect many will scoff at that idea since the IP can be sold at bankruptcy auction but perhaps with an expiration date on the escrow agreement it would be a good tool for start-ups to use.”

I’m not sure how widely used software escrow is, but it is certainly not a new thing. I ran into it when I was looking for a hosted supply chain solution a few years ago. I asked them what would happen if they go away and they introduced me to the concept of software escrow.

Source code escrow is a very detailed process and has strict controls over the IP. It is totally up to the parties involved, but you can always specify that the beneficiary is not allowed to use the IP outside of the scope of its intended purpose, i.e. they can’t take it and commercialize it on its own or use it in their own products.

Source code escrow is really only used to facilitate business continuity, not to turn over rights to use the IP as you wish. Those rights are maintained by the owners, probably the investors (or creditors) in the venture, to do with as they wish.

SaaS *IS* Ubiquitous

I have also been told that SaaS is in use in just about every Enterprise in one form or another. I would take it one step further and say that both Pureplay SaaS and Hybrid SaaS applications are both in use heavily. Pureplay SaaS in the form of HRM, CRM, SCM and Hybrid in the form of vendor-provided desktop applications such as benefits management, shipping carrier systems from UPS and FedEx, etc.

If SaaS is already in Corporate America, why do I say the barrier is still there? Three reasons. 1) you are a start-up, not an existing vendor with a new (often free) product to improve the relationship (such as UPS or FedEx) or 2) you are requiring payment in excess of the unit managers expensing abilities or have requirements outside of that of a standard PC (thus drawing the attention of the IT and Finance departments) and/or 3) you are trying to differentiate your product and must sell to multiple levels, thus bringing it to the attention of the IT department and other conservative levels of management.

I have been inside of multiple companies where I am getting resistance due to the nature of our product architecture, while simultaneously talking about how we are going to integrate with other systems in use that are SaaS themselves. Again, your experience may vary, and this is all based on my experiences. In my experience it is still a challenge for a vendor to sell a SaaS-delivered product in Fortune 1000 companies.

Times are changing, it is getting better, and soon, SaaS will be ubiquitous. Until then, please be prepared. You *can* sell SaaS-delivered solutions to Fortune 1000 companies; it is just easier if you know what to expect when you go in there. Good luck!

– Lincoln

About Lincoln Murphy

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  • No Goals, No Customer Success: Unlocking the Power of the Goal Discovery Framework
  • Revenue Roadblocks: How We’re Sabotaging Our Own Growth
  • Good Fit vs. Bad Fit vs. Ideal Customers: The Key to Unlocking Sustainable Growth
  • Opt-In vs. Opt-Out Trials: The Hidden Impact on Customer Retention and Success
  • From Transactions to Relationships: Unleashing Customer Potential with AX
  • Renewal Psychology: From an Adversarial Process to a Celebration of Success
  • Pods in Customer Success vs. Sales: A Side-by-Side Comparison
  • The Role of Pods in CSM Coverage Models: The Evolving Landscape
  • Pooled CSMs: Benefits, Challenges, and Requirements for Success
  • Beyond Touch Levels: Scaling Customer Success through Appropriate Experience (AX)
  • The Goal Discovery Framework for Customer Success Management
  • Storytelling in Customer Success: Use the Power of Goal Discovery
  • Customer Success Scaling: Capacity Planning and Resource Allocation
  • Bridging the Engagement Gap: Keeping Customers Actively Invested
  • Build a Social Proof Machine: Consistently Generate Real Advocates at Scale
  • The Untapped Potential of Social Proof through Earned Advocacy
  • From KPIs to Connection: Transforming Metrics Into Meaningful Relationships
  • 5 Outdated Email Tactics You Need to Abandon in 2024
  • Every Department Must Recognize the Value of Customer Success
  • Retention: Shifting from Reactive to Proactive to Stop Chasing and Start Leading
  • Why High Usage Doesn’t Guarantee Customer Success
  • Scaling Your Customer Success Team Without Losing Control
  • The Art and Science of Continuous Goal Alignment in Customer Success
  • Goal Discovery: The Essential Task You Never Had Time for (Until Now!)
  • Aligning Customer Success and Sales: Bridging the Great Divide
  • Motivating Action: The Hard Truth of Driving Customer Engagement
  • Customer Retention: Proactive, Reactive, and At-Risk Analysis
  • Navigating Partner Success in a Multi-Channel World
  • Unlocking Potential: How to Allocate Customers to CSMs
  • AX-Based Coverage Segments: Customer Success Evolved
  • RevOps Evolved: The Key to Rapid, Exponential Revenue Growth (2024)
  • Redefining Email Engagement: New Metrics for a New Era (2024)
  • Understand, Classify, and Effectively Analyze Churn
  • Customer Negotiation: Discounts, Retention, and Value
  • The Art of Objection Handling in Customer Success
  • Driving Exponential Growth: The Art of Selling to Existing Customers
  • NRR Panic: The Rollercoaster Ride You Never Saw Coming
  • Motivation vs. Discipline: How Knowing the Difference Skyrockets Customer Engagement
  • Why CSM Positioning is so Important (and How to Fix it)
  • Customer Status: The Hidden Motivator You Can’t Ignore
  • The Power of Curiosity in Customer Success
  • Creating Customer Success Playbooks with ChatGPT
  • ChatGPT or Bing: Which AI Tool is Best for Customer Success
  • Customer Success Pros: Stay Ahead of the Game with ChatGPT
  • ChatGPT in Customer Success: Generative Output to Desired Outcome
  • Stop Teaching Your Customers to Ignore You! A Guide to Effective Customer Engagement
  • ChatGPT is a Customer Success Game-Changer
  • Growth Unlocked: The Key to Exponential Account Expansion
  • Customer Success: Defined (2024)
  • Stop Confusing Free Trials and Onboarding (It’s Costing You Customers)
  • The Importance of Consistency in Customer Success Management
  • The Real Reason Your Company Invests in Customer Success
  • Customers Hate These 3 Things (and How to Avoid Them)
  • The 5 Secrets of World-class Customer Success Managers
  • Customer Onboarding: How to Design and Implement an Effective Onboarding Process
  • Eliminate Churn Forever in 5 Simple Steps
  • Customer Success: The Lost Art of Churn Reason Analysis
  • Customer Success: How to Quantify the Impact of Bad-fit Customers
  • Customer Onboarding: How to Design and Implement an Effective Onboarding Process
  • Designing a Sales-to-CSM Handoff that Actually Works
  • What is a good SaaS Churn Rate?
  • Achieve Exponential Growth by Focusing on CAC Efficiency
  • TTFV as a Sales KPI to Drive Engagement and Expansion
  • Time to First Value (TTFV) is a Customer Onboarding Goal
  • Customer Onboarding: AHA! or WTF?
  • Emotional Disconnect During Customer Onboarding
  • Bad Sales Handoffs Cause Customers to Ghost During Onboarding
  • How to Know if Customers are Actually Ghosting you
  • Why Customers Ghost you
  • The Basics of Customer Onboarding
  • Success Potential: Real Customer Success Starts Here
  • Account Expansion: How to Upsell Unsuccessful Customers
  • Customer Growth: Why Lack Of Expansion Is A Really Bad Sign
  • Account Expansion: If You Want To Grow Fast, Do This…
  • Customer Growth: Upselling Hurts Trust (When You Do It Wrong)
  • Customer Growth: The Difference between Sales and Expansion
  • Introducing the BEAST Message Framework for Customer Engagement
  • Introducing the Customer Engagement Communication Model
  • Churn Classification Framework For Customer Success Management (2024 Update)
  • Customer Success and Sales: Why the Latter determines the Former
  • Appropriate Experience is Required for Customer Success
  • What Are The Best Customer Success KPIs?
  • You Can’t Solve Upstream Problems Down Stream
  • Customer Success is a Simple Concept (Don’t Overthink It)
  • Customer Success can’t fit into Existing Frameworks
  • Those aren’t Problems. Those are Customers!
  • Customer Onboarding Success Secret: Don’t Overwhelm Customers
  • A QBR is NOT Required for Customer Success
  • Customer Success: The Importance of User or Customer Onboarding
  • How to Define Roles in Customer Success Management
  • Customer Success: High/Low/No Touch Customer Segmentation
  • Customer Success: Incorporating High/Low/No Touch into Onboarding
  • Customer Success: How to help Salespeople with Customer Segmentation
  • Customer Success: Determining Which Customers on which to Focus
  • Customer Success: Who Should Handle Upsells?
  • Customer Success: How to Reset Mismanaged Expectations
  • Customer Success: Customer Engagement Across the Entire Lifecycle
  • How to Increase Customer Lifetime Value (LTV)
  • The True Cost of Meetings in Customer Success Management
  • Meetings as a Customer Success Metric: The Misguided Path
  • No Goals, No Customer Success: Unlocking the Power of the Goal Discovery Framework
  • Revenue Roadblocks: How We’re Sabotaging Our Own Growth
  • Good Fit vs. Bad Fit vs. Ideal Customers: The Key to Unlocking Sustainable Growth
  • Opt-In vs. Opt-Out Trials: The Hidden Impact on Customer Retention and Success
  • From Transactions to Relationships: Unleashing Customer Potential with AX
  • Renewal Psychology: From an Adversarial Process to a Celebration of Success
  • Pods in Customer Success vs. Sales: A Side-by-Side Comparison
  • The Role of Pods in CSM Coverage Models: The Evolving Landscape
  • Pooled CSMs: Benefits, Challenges, and Requirements for Success
  • Beyond Touch Levels: Scaling Customer Success through Appropriate Experience (AX)
  • The Goal Discovery Framework for Customer Success Management
  • Storytelling in Customer Success: Use the Power of Goal Discovery
  • Customer Success Scaling: Capacity Planning and Resource Allocation
  • Bridging the Engagement Gap: Keeping Customers Actively Invested
  • Build a Social Proof Machine: Consistently Generate Real Advocates at Scale
  • The Untapped Potential of Social Proof through Earned Advocacy
  • From KPIs to Connection: Transforming Metrics Into Meaningful Relationships
  • 5 Outdated Email Tactics You Need to Abandon in 2024
  • Every Department Must Recognize the Value of Customer Success
  • Retention: Shifting from Reactive to Proactive to Stop Chasing and Start Leading
  • Why High Usage Doesn’t Guarantee Customer Success
  • Scaling Your Customer Success Team Without Losing Control
  • The Art and Science of Continuous Goal Alignment in Customer Success
  • Goal Discovery: The Essential Task You Never Had Time for (Until Now!)
  • Aligning Customer Success and Sales: Bridging the Great Divide
  • Motivating Action: The Hard Truth of Driving Customer Engagement
  • Customer Retention: Proactive, Reactive, and At-Risk Analysis
  • Navigating Partner Success in a Multi-Channel World
  • Unlocking Potential: How to Allocate Customers to CSMs
  • AX-Based Coverage Segments: Customer Success Evolved
  • RevOps Evolved: The Key to Rapid, Exponential Revenue Growth (2024)
  • Redefining Email Engagement: New Metrics for a New Era (2024)
  • Understand, Classify, and Effectively Analyze Churn
  • Customer Negotiation: Discounts, Retention, and Value
  • The Art of Objection Handling in Customer Success
  • Driving Exponential Growth: The Art of Selling to Existing Customers
  • NRR Panic: The Rollercoaster Ride You Never Saw Coming
  • Motivation vs. Discipline: How Knowing the Difference Skyrockets Customer Engagement
  • Why CSM Positioning is so Important (and How to Fix it)
  • Customer Status: The Hidden Motivator You Can’t Ignore
  • The Power of Curiosity in Customer Success
  • Creating Customer Success Playbooks with ChatGPT
  • ChatGPT or Bing: Which AI Tool is Best for Customer Success
  • Customer Success Pros: Stay Ahead of the Game with ChatGPT
  • ChatGPT in Customer Success: Generative Output to Desired Outcome
  • Stop Teaching Your Customers to Ignore You! A Guide to Effective Customer Engagement
  • ChatGPT is a Customer Success Game-Changer
  • Growth Unlocked: The Key to Exponential Account Expansion
  • Customer Success: Defined (2024)
  • Stop Confusing Free Trials and Onboarding (It’s Costing You Customers)
  • The Importance of Consistency in Customer Success Management
  • The Real Reason Your Company Invests in Customer Success
  • Customers Hate These 3 Things (and How to Avoid Them)
  • The 5 Secrets of World-class Customer Success Managers
  • Customer Onboarding: How to Design and Implement an Effective Onboarding Process
  • Eliminate Churn Forever in 5 Simple Steps
  • Customer Success: The Lost Art of Churn Reason Analysis
  • Customer Success: How to Quantify the Impact of Bad-fit Customers
  • Customer Onboarding: How to Design and Implement an Effective Onboarding Process
  • Designing a Sales-to-CSM Handoff that Actually Works
  • What is a good SaaS Churn Rate?
  • Achieve Exponential Growth by Focusing on CAC Efficiency
  • TTFV as a Sales KPI to Drive Engagement and Expansion
  • Time to First Value (TTFV) is a Customer Onboarding Goal
  • Customer Onboarding: AHA! or WTF?
  • Emotional Disconnect During Customer Onboarding
  • Bad Sales Handoffs Cause Customers to Ghost During Onboarding
  • How to Know if Customers are Actually Ghosting you
  • Why Customers Ghost you
  • The Basics of Customer Onboarding
  • Success Potential: Real Customer Success Starts Here
  • Account Expansion: How to Upsell Unsuccessful Customers
  • Customer Growth: Why Lack Of Expansion Is A Really Bad Sign
  • Account Expansion: If You Want To Grow Fast, Do This…
  • Customer Growth: Upselling Hurts Trust (When You Do It Wrong)
  • Customer Growth: The Difference between Sales and Expansion
  • Introducing the BEAST Message Framework for Customer Engagement
  • Introducing the Customer Engagement Communication Model
  • Churn Classification Framework For Customer Success Management (2024 Update)
  • Customer Success and Sales: Why the Latter determines the Former
  • Appropriate Experience is Required for Customer Success
  • What Are The Best Customer Success KPIs?
  • You Can’t Solve Upstream Problems Down Stream
  • Customer Success is a Simple Concept (Don’t Overthink It)
  • Customer Success can’t fit into Existing Frameworks
  • Those aren’t Problems. Those are Customers!
  • Customer Onboarding Success Secret: Don’t Overwhelm Customers
  • A QBR is NOT Required for Customer Success
  • Customer Success: The Importance of User or Customer Onboarding
  • How to Define Roles in Customer Success Management
  • Customer Success: High/Low/No Touch Customer Segmentation
  • Customer Success: Incorporating High/Low/No Touch into Onboarding
  • Customer Success: How to help Salespeople with Customer Segmentation
  • Customer Success: Determining Which Customers on which to Focus
  • Customer Success: Who Should Handle Upsells?
  • Customer Success: How to Reset Mismanaged Expectations
  • Customer Success: Customer Engagement Across the Entire Lifecycle
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