Software
as a Service
We’ve
been continuing to watch the growth of the market in software as a
service. Some of that
are simply vendors offering their own software to customers as a
hosted service instead of (or in addition to) offering it as
packaged software. In other cases, it’s traditional software vendors, finding
another channel to market via partnering with service providers
who themselves want to become software service providers,
typically offering a portfolio of software to a particular target
customer (small businesses, a vertical market, etc.).
Smart Online
However,
we have also observed another kind of company surfacing.
That’s a company, which creates itself as an OEM software
service provider for companies who are not in the software or
computer services business at all.
Recently, we’ve been looking at Smart Online, a good
example of that new breed.
Smart
Online was originally (starting more than ten years ago in 1993),
a seller of small business software, providing 15 useful packages
at low prices, with a financial and business support focus, via
the retail channel. Typical
offerings included How to Write a Business Plan, How to Project
Cash Flow, and How to Apply for a Loan.
In
the late nineties, as the Internet became increasingly important,
Smart decided to make the major investment of turning all of its
offerings into on-line services.
Their original idea was that they would sell them to small
businesses at a monthly fee.
Smart started doing this in 1998.
They ran into a predictable problem.
It’s one thing to create very good technology offerings;
it may be quite another to successfully market them at adequate
volumes and interesting revenues.
So
Smart Online came up with a new idea.
Instead of marketing directly to small business they
decided to become an OEM to larger firms with tens of thousands to
millions of customers. Their
impressive customer list includes 18 business partners -- banks,
financial magazines (like Inc. and Fast Company), credit unions,
and phone companies – all places where small businesses gather
in large numbers.
Smart
provides their products to the OEM customer on a private label
basis. To the bank,
magazine, or phone company customer, it looks like it’s coming
from their existing business relationship, with all the
appropriate logos and trade dress (style).
Smart can offer the services themselves or combine them
with bank or other offerings (such as loan applications).
All of the Smart services are hosted on Smart’s own site
and the OEM pays a set-up charge to Smart Online plus charges
related to the number of their customers using the services.
Smart
can customize and set up a service for a business partner in 30 to
60 days and they handle all the customer and technical support.
Whether
the OEM charges for the service or offers it to his customers as a
differentiator is up to his own business model. For some OEM’s the Smart service may end up as a marketing
cost; for others it could represent a considerable new income
stream.
Individual
businesses can still go to the Smart Online web site, http://www.smartonline.com/servlets/syngen/navigation/hometab_c/
and sign up for a monthly subscription to a portfolio of their
products ($29.95 per month for the base service) or buy individual
products).
Coiga
Coiga’s
a three-year old company that has made a living selling enterprise
lead generation management software.
Their CEO, Clark Dong, says “Coiga increases lead
generation efficiency by addressing the long standing problem of
poor alignment between sales and marketing through a new
proprietary business process.”
Basically,
they synchronize all the organization’s campaign efforts by
standardizing and unifying response capture across channels via a
central response collector and they increase the relevancy and
depth of customer interaction experiences through a rich set of
collection technologies to harvest the maximum actionable sales
intelligence. They
believe the result is a significant increase in the lead to sales
conversion ratio, resulting in the most immediate and efficient
way to increase revenue.
That’s
nice, but it wouldn’t get them into this article. What does is that Coiga is piloting a hosted version of their
product, aimed at the SMB market.
They believe that if they can deliver their software
product as a service, it will be useful to much smaller companies,
down into the $5 to 10 million revenue range.
Coiga
provides a way to offer all of the lead generation services a
business might need through their Business Launch Pad and provides
assistance at every level of the lead generation process from
targeting prospects, to making an offer, to collecting responses
and qualifying leads. In each case, input from Sales (which knows what kinds of
leads it’s looking for) can be an input to the process, so that
the highest quality leads are an end product. Leads can then be
output directly into a sales management system like SalesForce.com.
With input from sales into the lead generation process. The
insights available to the sales force will be much higher, leading
to higher sales rates and revenues.
This is a numbers games, so even modest gains in the
quality of leads can lead to big gains in revenue.
Coiga’s
hosted service is in beta now, with a public service planned for
later this year. Monthly
costs will depend on the size of the prospect lists being managed
by Coiga for customers.
askSAM
askSAM
is one of those well-kept secrets of the software world.
An easy-to-use database product that’s been around
forever (actually about 20 years) and is very popular among those
who’ve found it. We’ve
known about it for years and recently, talking with their CEO Phil
Schnyder, we discovered they’ve got software as service offering
that sounds suspiciously like a collaboration or groupware
product.
askSAM
calls it Project Desk and the focus is on web-based project
management. Project
Desk lets a team manage projects and tasks by providing a virtual
workspace to facilitate communication between team members.
It supports project management, task management, threaded
discussions, resource building, email notification of tasks and
projects, report generation, and document sharing.
Since it’s web-based, any team member can access it from
anywhere.
A
free version of Project Desk, supporting up to 4 team members and
2 projects (but not document storage) is available on a permanent
(not trial) basis. Paid
versions are available for 10 to 100 users, with from 20 to an
unlimited number of projects, and 50 to 500 MB of storage, at
prices ranging from $49.95 to $349.95 per month.
That means you’re supporting your users at a cost of
$3.50 to $4.99 per user per month.
Phil
notes that they find the usage patterns interesting.
-
He
notes that there’s some resistance to storing data on hosted
servers. askSAM
added a feature to Project Desk that allows users to download
their data if they want to which seems to quell some
objections.
-
The
real lure seems to be the web-based access from any computer.
They find that if they can get people to try the
software they can get a good conversion rate from free to
paid.
-
People
particularly like the ad hoc nature of the software.
They can set it up, pay for it while a project is
running, and then stop a subscription when the project is
completed. “Some
companies do pop off and on as new projects come and go,”
Phil comments. Of course, askSAM would like them to be more permanent, but
the ease of monthly subscription software is one of the
attractions of the model.
We’d point out that askSAM might be able to change
this behavior by offering a discount for committing to an
annual subscription.
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