Retooling SaaS for the Mid-Market
Every major SaaS vendor is making the move to the mid-market. And why not? The enterprise field is limited – the number of small to mid-sized companies grows each and every day. But what does it mean to rebuild/retool/realign your offerings from full-fledged enterprise scale to something slim and trim and cost-effective for the mid-market? That seems to be the $25 question for most software vendors looking to capture a thick slice of the SMB pie.
While not offering any ground-breaking insight into the issue, eWeek’s New&Analysis section included a roundtable of input on the topic, the full extent of which you can find here. Some notable snippets:
Finding the large enterprise market saturated, vendors have been trying to go “down market.” Microsoft, Sun Microsystems and Oracle, for example, have come out with stripped-down versions of some of their enterprise products. They’ve also been productizing their service offerings in such a way that smaller companies are seeing certain capabilities for the first time. But does simplicity come at the price of effectiveness?
Randy Dugger, president of Dugger & Associates in San Jose, CA: The biggest thing I see with the startups I consult with is that they just want everything up and running quickly. It really comes down to whether they want to outsource everything or bring it in-house. If they want to bring it in-house, it tends to be a small-business server—it’s an all-in-one solution, and it comes up quickly with very little hands-on. [These kinds of products] have a lot of wizards for taking care of the administration of the tools.
Tom Miller, senior director of IT for FoxHollow Technologies, Redwood City, CA: For me, I need to look at each vendor. I need to look at its enterprise offering, and I need to look at its designated SMB offering—almost like it’s in a matrix or a table. I need to see what differentiates the SMB offering—not only from a requirements standpoint of hardware and software but also in how the product is implemented through professional services, how it’s managed and supported in the enterprise—before I can say one offering is good or not good.
I’m also wary of the downsized product in terms of what was left out.
eWeek: Dell has been getting into the services business, with its typical commodity-like approach—offering a menu of repeatable services, none of which are very fancy but that apparently people need. IBM similarly has been downsizing its custom services with more packaged services. Are people seeing those out in the marketplace, and are they meeting your needs?
Miller: I’m seeing them, but I don’t know if their rates are similarly downsized. I think the rate structure isn’t always appropriate for an SMB, and the level of business and technical expertise of the person actually providing the technical services isn’t always as high as it would be for a larger enterprise customer.
eWeek: But they’re going to charge you the same?
Miller: Or near it. So, again, they make their real profit off the professional services side. They’re not going to want to discount much at all. What I’d like to see when vendors come in and pitch a product is an understanding of what they’re pitching toward. We’ve had occasions when we’ve worked with vendors and purchased their products, but in our minds and our eyes, they hadn’t done due diligence in understanding our environment. This leads to problems when you’re going through implementation.
