Unheralded SaaS benefit

Jason Corsello points to a potentially significant business benefit from SaaS models. "Many on-demand vendors maintain valuable data across hundreds and thousands of companies.  The ability to mine that data and identify industry trends, practices, and key success elements..."

Historically, vendors such as Oracle and SAP had some idea through survey work and through process benchmarking work done by firms like Hackett Group on features and business processes customer bases were using . But SaaS vendors have so much more accurate insight on feature usage in their customer bases. Clearly, cost benchmarks will still be elusive but business practice (such as 2 way vs. 3 way matching in purchasing/AP) information should become a lot more specific.

I hesitate to say "best practice" to describe what the average customer uses in their software but the data SaaS vendors collect should allow for much better alignment of customer usage and software features.

Comments

[Niel Robertson]

There is another hidden benefit here - these vendors get to see what features 100's of thousands of users actually use by looking into their weblogs. Traditional ISVs have no idea what really gets used by their customers. That's why Oracle is stuck spending a couple of years trying to determine the best of the best requirements and why I need to spend 1/2 my time in Q3 on the road talking to Newmerix customers. Granted business process semantics are not captured perfectly in weblogs, but as a starting point it would help Oracle cut out 25% of the functionality that never gets touched (or only gets touched by a certain type of user). Another reason why SaaS companies should be able to move faster and SMARTER than traditional enterprise vendors.

[Dennis Howlett]

You guys only just worked this out? It changes the nature of competitive intelligence and becomes a valuable asset in its own right. I wonder how much of this is factored into SaaS IPO and post money valuations?

[viinnie mirchandani]

Dennis, we are slow -)

seriously it gives me new ideas on how to conduct s/w eval and pricing per function point...

[Jason Corsello]

I think usage and features is important for SaaS vendors but SaaS can have much more profound impacts. Three vendors come to mind...

Salesforce.com - Could you imagine using SFDC to determine how sales guys are using the system and matching that with their sales performance?

SuccessFactors - Nearly 2 million users should provide insight into the competencies and skills of an individual and how that aligns with their individual goals/performance and therefore having the ability to alter the culture by truly being able to define a "high performer"

Taleo - Intelligence in the recruiting process should highlight what parts of the process is successful vs. other.

Just a thought.