SaaS Industry Evolution Will See More Platform Strategies

There is a new one-horned miracle in SaaS-town, and it is the platform unicorn. Many SaaS organizations think of their business as having a single-direction flow – starting with a supplier, moving to the SaaS company itself, down through a channel partner, and onto the end customer.

While this software-as-a-service model is a very successful business model, many businesses are limiting themselves when they only use channel partners to go to market. The challenge is that while these channel partners interact with customers, they create a relationship with that customer and, consequently, "own" that relationship and all its associated data. In the era of big data, very little is worth more than what those experiences mean to a SaaS business with a product it wants to sell to that customer.

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What then is to be done? A new ecosystem that puts the SaaS business at the center of that network is the answer. It is an omnidirectional platform that brings together all stakeholders and ensures that the SaaS business is building a brand with all those involved.

Moving to new business model requires that the SaaS business redefine the roles and establish value with all stakeholders – partners and end-users alike. It requires that the SaaS company consider each constituent as a customer with very different but not competing for needs. By its very nature, this creates a system that is oriented towards a more collaborative process. It will need to prove to a constituent that their needs can be served within the ecosystem – all while ensuring the SaaS business is not undermining the channel partner.

Regardless of the value of this model, shifting to a "multi-sided business model" will be challenging for a number of reasons. Fortunately, some steps can help make the transition smoother. For example, the leaders must speak to this strategy and follow-through made with both action and resource allocation within the company. Ensuring there are skilled people to assist with the transition and key performance indicators to help keep the organization on track.

SaaS companies should also be mindful of developing a business model that will be reaching out to the same consumers that their channel partners are already serving. Going this route can mean the elimination of a subscription fee paid by channel partners, as it will be essential to attract these partners to the network. Also, end-users are concerned with two things – convenience and cost. Without considering how the SaaS company will provide this to the customer, many are unlikely to join the platform.

The other hurdle that comes with moving towards a platform model is how the SaaS company will think about the end-customer. The SaaS company should think of itself as a both a B2B and a B2C. Reforming those relationships will be the biggest challenge for companies making the transition. The move will involve specific sales and marketing skill sets that can continuously move between the needs of various stakeholders within the ecosystem. Artificial intelligence will be required for this kind of work. For this to be successful, a unique value must be created for each user that is appealing enough to encourage that constituent to join. Not only should a tailor-made sales pitch be made for each member, but each member’s department. As most decisions are made with consultation from different divisions, a member’s company must be considered as a whole and in its parts.

Some strategies to counter some of these challenges include ensuring the board and leaders can speak to investors regarding the SaaS company's transition to a modern business model. It will also be essential to take a full inventory of the firm's network, assets, and customer needs. Due to an increase in transactions involved with becoming a centralized SaaS hub, company infrastructure may be inadequate to manage such an uptick in workload. As new capabilities are developed, it'll be important that there is a clear understanding of how these are in line with the company's KPIs.

Evolving into a new, modern SaaS platform may have its difficulties but could ultimately be the difference between success or failure in a highly competitive market.