What SaaS Expertise Do You Need?

Establishing SaaS at an enterprise software company that sells license products is challenging. To succeed, you need to understand what is different about SaaS. I found that to be successful an enterprise software company has to develop expertise for:

SaaS Sales: The sales process, contractual commitments, and buyers are different. SaaS is a value sale that consists of both product functionality and services. Because services have an underlying cost, the pricing and discounting process will have to ensure profitability and frequently will be more rigorous than with a license sale. As in the ubiquitous Salesforce.com marketing, the sales rep has to be knowledgeable on the value proposition of SaaS and be comfortable negotiating service contracts with SLA’s and operational commitments vs. a more straightforward license contract without them. Negotiation can become tricky with existing customers because license contracts require revision and frequently customer procurement will have to be educated to accept the new terms. And if this complexity was not enough, often the SaaS buyer is Line of Business vs. a central IT buyer, and what they value and the price point they are willing to pay is different.

SaaS Channel: The ecosystem of partners is different. Most VAR’s that resell license products have built a consulting practice to install, configure and even operate the products. The services offered make money for the partner. Reselling software comes second. SaaS partners, on the other hand, will build their practice around adoption including education, integration, and best practices. The relationship the SaaS partner has with the customer is ongoing including the responsibility to renew the subscription, and is not focused only on the implementation phase like with many license VAR’s.

SaaS Marketing: Marketing needs to evangelize SaaS value proposition in addition to promotion of incremental product functionality. The value of the services should be emphasized like:

• faster onboarding (product is online and ready to use right away)
• upgrades are included (big pain point for most license customers)
• data is backed and can be recovered quickly
• product includes disaster recovery
• service is highly available (most companies promote 99.9% availability or higher)
• standards ensure security (ISO 27001 / 27018, SOC 2, PCI, HIPAA)
• Promoting these value points and even having marketing campaigns around them is essential, especially when competing with companies that aggressively advocate for SaaS.

SaaS Legal: When negotiating a contract with services language, you need someone that is familiar with SaaS to negotiate effectively with the prospect’s legal team. Also, the legal framework you offer as a starting point for negotiation has to be competitive in the market and SaaS oriented. You can’t have too many non-standard legal clauses that make negotiation difficult because you didn’t consider how customers buy and consume SaaS. There are some fundamental differences between SaaS and license such as ownership. SaaS grants the customer the right to use. There is no ownership as with a license, which customer owns. Maintenance and support are built-in. The SaaS subscription is all inclusive of intellectual property, operations, support, and upgrades.

SaaS IT stack: A SaaS subscription requires a different quoting and fulfillment process. Instead of 100 licenses for price X and 20% maintenance & support on top of that, a SaaS subscription is quantity x time = price. The added dimension of time is rarely built into IT systems, requiring a retrofit or an entirely new system altogether (I have used Zuora and Avangate in the past to bridge the gap, and Stripe offers subscription capability now as well). Even the fulfillment of the order is different, as there is a provisioning step vs. a download link.

SaaS Customer Success: If you don’t have a Customer Success team, you will for sure need one. SaaS customer loyalty is harder to maintain because the switching costs are much lower. Imagine buying a piece of enterprise software, which requires a significant up-front purchase, considerable implementation costs and then ongoing infrastructure, operations, and administration costs. And frequently these products are heavily customized to your environment. You can’t easily step out of the commitment. With SaaS, it’s much more straightforward, unless you heavily configure and integrate the solution. When the subscription is coming up for renewal, the first question the customer will ask themselves is: are we using the subscription we have purchased? If not, no need to renew and all costs go away. Moreover, if adoption is not going well, the renewal can be at a reduced capacity. Therefore, you need a Customer Success Manager that will maintain the customer relationship, drive adoption, and help the customer successfully onboard the solution. When the renewal is coming up the CSM will ensure the proposal matches customer expectations, and when growth is successful, CSM will help identify demand, cross-sell opportunities and will work with sales to expand the deployment. Also, the CSM is a great contact point to help remove company obstacles preventing the customer from achieving their objectives with the product.

SaaS Customer Operations: There needs to be a team accountable for the service managing day to day operations. A couple of different approaches are possible, from a modern DevOps approach where RnD continuously releases code to production and manages the environment to a more classic Dev and Ops approach where RnD releases less frequently, and there is a dedicated SaaS operations team that installs, upgrades and maintains the application on behalf of the customer. In either case, the operations team has to be customer focused, which entails meeting customer SLA’s and contractual commitments while providing an exceptional customer experience.

I hope this serves as a foundation for your SaaS journey, whether you are just beginning or looking for ways to scale a SaaS business. And if you have experience with SaaS, please share the expertise that you have developed to be successful.


@FilipSzymanski is a Silicon Valley business leader, visionary, technologist and advisor, with two decades of Enterprise Software experience. Most recently, he led a SaaS transformation at HP / HPE creating a $100m+ business to compete with emerging Cloud vendors. He also advises startups in creating compelling business plans, taking new products to market and implementing operations with solid financial discipline. Formerly he held a variety of positions in Strategy, Product Management and Technical Sales that shaped his interest and passion for technology and Software as a Service.