Hacking Growth for SaaS Market Leadership

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Information about Hacking Growth for SaaS Market Leadership
Business & Mgmt

Published on February 22, 2014

Author: floyddcosta

Source: slideshare.net


A platform approach to help Software as a Service businesses swiftly grow and outperform competition

1 Software as a Service Platform Strategy Exponential Growth Hacking Growth for SaaS Market Leadership A platform approach to help SaaS businesses swiftly grow and outperform competition Floyd DCosta The Platform Way

2 The SaaS market has been rapidly growing, albeit with highly ‘oligopical’ segments Sales & Service Talent Management Supply Chain /B2B Workda y Jobvite Ariba Concur Rearden Commerce DemandTec Covisint Coupa SPS Commerce ob10 Emptoris GHX Arena Solutions MFG.com Elemica SciQuest BravoSolution Aravo Workday HireVue Sonar6 Oracle RightNow Technologies Oracle Venda MarketLive IBM Adobe Xactly FPX Veeva Systems LivePerson Baynote SugarCRM Axeda Microsoft BigMachines FastSpring OrderMotion Salesforce.com Bazaarvoice Demandforce Collaboration, Integration, Productivity IntraLinks Responsys Google Informatica Microsoft Covisint Citrix Dropbox Cisco NetSuite Box.net IBM Ultimate Software Rootstock Intacct Freshbooks Advanced Planning Zuora ServiceNow ProofPoint Symantec Apptix Cisco Google Logmein RealPage Marketing & Social ConstantContact Vocus Marketo SuccessFactors Plex Online FinancialForce.com Patersons Saba SumTotal Peopleclick/Authoria Hubwoo Intuit Salesforce.com Taleo Kenexa Cornerstone OnDemand iContact ExactTarget Lithium Vertical Response PowerReviews Medidata Convio CaseCentral OpenTable Management Dynamics Athena Health DealerTrack Vertical Specialists Tangoe Telogis Back Office (ERP, HRIS, and Accounting) AppFirst IT and Security SaaS application revenue could grow from $10 billion in 2010 to $21.3 billion in 2015, a 16.3% CAGR, increasing from 9.6% of all enterprise application purchases in 2010 to 13.8% in 2015 Source: Goldman Sachs, Yankee Group and Gartner The Platform Way

3 The Challenge: In such hyper-growth markets, linear incremental progress can be limiting; and with churn, competition can quickly get overwhelming The linear product-based business model is broken. A case example: VS While adding features is good practice, it rarely brings about the exponential growth required to get to and stay at the top The Platform Way

4 The Solution: To radically hack growth, SaaS’s need to shift to a platform business model, establish an ecosystem and nurture communities • In a platform model, cost and revenue are generated, both to the left and the right of the value chain • Because of network effects, platforms enjoy increasing returns to scale. • Value grows as the platform matches demand from both sides. • Users will pay more for access to a bigger network, so margins improve as user bases grow. By leveraging dual-sided network effects, reducing transaction costs and the internalization of network effects, SaaS vendors will able to grow swiftly, revolutionize marketplaces as well as substitute incumbents Ref: Strategies for Two-Sided Markets [Eisenmann, Parker and van Alstyne]; image via Dion Hinchcliffe The Platform Way

5 The Proof! Platform businesses are disrupting markets and transforming complete industries Top 5 firms in 2013 by Market Cap. InterBrand: 2013 Best Global Brands Organization Market Cap Position Brand Apple 438 1 Apple Exxon Mobile 380 2 Google Google 291 3 CocaCola Microsoft 282 4 IBM Berkshire Hathaway 281 5 Microsoft From Google and Amazon to Apple and Facebook, platform businesses are dominating the landscape and displacing market leaders faster than ever before Ref: Bloomberg, InterBrand The Platform Way

6 So how do SaaS businesses make the shift to a Platform model? 03 An Approach 01 A Definition 02 A Framework 04 Some Strategic Elements “In the future, businesses will no longer compete over superior products, but over better evolved platforms” The Platform Way

7 Defining a ‘platform’ – Understand the paradigm shift from owning to enabling value creation and consumption • Facebook bought Instagram for $1B . • Instagram has only 13 employees. But it has 30 million users • Wall Street investors recently gave Twitter a $24.9 billion valuation. • Twitter has only $500 million in revenue, no major physical assets, and no profit. • Similarly, LinkedIn is worth $26 billion. • And Facebook, despite a poorly executed IPO, is now valued at $120 billion, making it one of the 30 most valuable companies in the world. Platforms enable the creation and exchange of value between users, with the business only providing the infrastructure enabling users to interact Source: Bloomberg Business Week, Yahoo Finance The Platform Way

8 Getting started - A five point framework to seed, cultivate and harvest platform thinking Social A positive impact Prosumerism blurring between value creators and consumers Extend Technology every company, digital and connected Business Model Innovation democratize value creation Network Value Circles redefine competition Open Innovation Culture a radical new ethos Remember, your platform should be a system, which other entities can easily connect with, build products and services on top of, and co-create value The Platform Way

9 The way forward - A high-level approach to crafting a platform Experiment; Hack growth [focus on enhancing the underlying system, to enable others to easily connect, create and consume higher value propositions on top of your platform] 5 1 2 Identify opportunities in the value chain to harness networks and channel cocreation [Think beyond your own products and services] 4 Incubate partnerships and nurture multiplesided communities; enable peer segments to interact via your platform Map and understand the ecosystem [industry and organizational] 3 Expand your technology’s scope; to enable the effortless creation, exchange and consumption of value by others [API’s, etc] Strategy is crucial - Deploying traditional ‘linear’ thinking, would definitely result in a wasted opportunity for a network business The Platform Way

10 Getting it right – Basic elements of a successful platform strategy 3 determining success factors 3 building blocks • Connection: how easily others can plug into the platform to share and transact • The Toolbox creates connection by making it easy for others to plug into the platform • Gravity: how well the platform attracts participants, both producers and consumers • The Magnet creates pull that attracts participants to the platform with a kind of social gravity. • Flow: how well the platform fosters the exchange and co-creation of value. • The Matchmaker fosters the flow of value by making connections between producers and consumers. Based on the overall position and approach, a platform business will need to place varying emphasis on each of the three building blocks. Ref: Three Elements of a Successful Platform Strategy [Bonchek and Choudary] The Platform Way

11 11 Thank you “A platform is a system that can be ….., adapted to countless needs and niches that the platform’s original developers could not have possibly contemplated, much less had time to accommodate.” - Marc Andreessen The Platform Way

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