[ringmaster]

This seems especially difficult for a web-based model, and I've personally questioned why anyone would want SaaS when:

1. The company already pays for and supports infrastructure.

2. The company already has a development/IT department that can support an installed product.

3. Viable Open Source alternatives (often using open standards) exist and can be tailored specifically to the company's business needs, either by the in-house team or by eager contractors.

It seems to me that the majority of SaaS providers don't have a way to make their data interoperable with their competitors' products and don't have a way to tailor their product to the specific needs of the business. Worse, there is an impression that SaaS services will offer support better than having someone internal to the company learn an installed or custom tool, when the reality is that many SaaS companies throw up a Get Satisfaction page and call it a day.

To me, a better SaaS sales pitch would include a few key points:

1. Describe the way that the company's data can be taken elsewhere and how well it will work. ("If you decide to cancel, you can push this button and drop the downloaded data directly into X-competitor's product, but we hope to impress you enough with our offering that you never need to do that.")

2. Describe the concrete benefits of a recurring payment over a one-time or per-upgrade fee. ("We are constantly making improvements and refinements to the product based on real client use. Here is a list of the last two iterations of updates, which happened on our regularly scheduled update cycle of X weeks/months.")

3. Describe the specific support and technical infrastructure that the SaaS provides that the company would have trouble or lag time implementing themselves. ("We constantly adjust our infrastructure to your needs, implementing load balancing, reporting, localization, etc. Our techs are on-call via phone/VoIP for your support issues during our regular business hours if there are any issues.")

I'm not suggesting that SaaS isn't a viable business model. I merely posit that the real and valid objections purchasers may have to locking themselves into a perpetual SaaS contract have not been addressed within this post, and are quite common with SaaS products in general. Rephrasing how you present the contract may sell better, but it doesn't change what you're offering.

[matwood]

I used to work in a large company with internal IT that also used quite a few SaaS providers. To your point #1, yes the providers had to provide up front how they would get our data out if we wanted to switch. They didn't have to switch it, but provide the data in a typical format (CSV, tab delimited, etc...).

Why we used SaaS was a mix of we didn't want to find and internalize the knowledge of having to do it ourselves (think payroll complexities) and we liked the flexibility of easily scaling up and down the users.

What SaaS allowed us to do was focus our IT on items that added direct business value and not commodity items like payroll.

[tel]

This is exactly what I was wondering. If your SaaS pitch fails because people are multiplying costs out as if they were fixed and are worried about existential risk/switching costs then either don't sell to them or sell up exactly (1-3).

I—for one—love this line when you can afford it: "we have n engineers full time on this project so you can't possibly have an internal product that grows as quickly".

Comparative advantage is an incredible force.

[String336]

> I've personally questioned why anyone would want SaaS when:

> 1. The company already pays for and supports infrastructure.

> 2. The company already has a development/IT department that can support an installed product.

Because adopting a SaaS offering instead means the company can greatly reduce the need for (or entirely get rid of) the infrastructure and staff which both cost exponentially more.

[DenisM]

Be careful about making this argument - the people whose job you're trying to eliminate might be the people who are making the decision. A better argument, if it applies, is that you offering reduces non-core work, allowing staff and resources to be focused on core work. Any company that has IT staff will likely benefit from continuing to have that staff, just focused more on value-add activities rather than chores.

[bdavisx]

Sometimes the IT department has more important things to work on. If the company makes "widgets", then it's usually better for their IT department to be working on something to make their widget making more competitive (faster, cheaper, better, whatever). So they "outsource" payroll, other HR and whatever else doesn't directly benefit "widget" making.