I have a particular interest in SaaS aggregation. My background is in SMBs so I have (I believe) a real understanding of the time and other constraints within which SMBs work. Given these constraints there are some barriers to SaaS adoption (as opposed to already aggregated shrink wrapped software) due to the time and effort taken to perform an integration exercise.
It is for this reason that I've long been a proponent of platform level SaaS aggregation – bundling up a bunch of services and offering them to customers in a quick and easy way.
When we look at who already has the extensive networks within SMBs, and who has both the breadth and the technical platform base to achieve this play, it's hard to look past the telcos. Of all the potential players – they arguable have the broadest and deepest relationship with SMBs (whether or not they understand their customers as we'll see later), and also understand the aggregation of discrete, but related, services.
Arguably the poster child for telcos "getting" SaaS is British Telecom. Phil Wainewright has followed BT's SaaS fortunes for some time and recently posted about the momentum their SaaS play seems to be gaining. I, like Phil, have been impressed at the effort that BT is putting into its SaaS offerings – this despite the relatively tiny proportion of their revenue that SaaS constitutes.
In Australia too, telco Telstra is planning on launching a SaaS platform they're calling T-Suite by the end of the year – their offering will include email, customer relationship management, collaboration, financial applications and security products, as well as online storage. While details are still under wraps – the Telstra offering would seem to be one of repackaging discrete SaaS apps and just providing a unified billing environment as the point of difference.
These two approaches then raise the real question in my mind which is whether the winning play will come from the aggregative approach (my preference) or from a more discrete offering. My read on the two options follows;
The app store approach
Sub-optimal in my mind, the app-store approach is when the Telco, seeing the low revenue that SaaS can drive, decides to merely create a "shop front" to market SaaS applications. In this approach the only real benefit to a customer is that, rather than paying multiple vendors, their Telco and SaaS services appear on one bill. This is no way helps the very real time constraints that SMBs face and, as such, is doomed to be an unsuccessful play.
The platform approach
At the risk of sounding evangelical – the platform approach is the only way to ensure SaaS success. This approach entails the Telco doing the groundwork both in terms of application selection, but also the facilitation of the integration exercise. This integration naturally includes an integration with the Telco core products and services. As an example I'm thinking here CRM that is integrated with accounting and a unified communication play. As Phil says;
If we look at the providers that BT is working with, we can see a nice ecosystem being created – Netsuite, SugarCRM, Genius.com, echosign, ribbit, BT Tradespace. BT really gets the integration aspects of SaaS. Phil reported that BT’s general manager of SaaS, Chris Lindsay, stated in a phone briefing that;
Further thoughts – a third-party, third-party play?
There main factor getting in the way of them succeeding in this play is the fact that telcos have a particularly corporate mindspace – they simply don't get the realities on the ground for SMBs. Telcos however have a powerful incentive to start understanding SMBs pretty quickly – with ARPU falling steeply, the massive SMB customer base is very attractive to them. There are some interesting moves around the telco space to actually reach out and begin to understand their SME customers – until they do this they'll be hard pressed to come up with the successful ecosystem models.
Into this disconnect walks Jamcracker, the somewhat unlikely named provider of aggregated on-demand plays. In essence Jamcracker does the stuff that the platform players don't do well – aggregating a bunch of on-demand offerings and on-selling them via a platform player's real-estate. Jamcracker provides complete bundled white-label solutions that can then form the basis of a broader platform-play.
So many options – so many questions;
- Should SaaS platform players just sell discrete offerings?
- Should they invest in creating integrated and complete offerings?
- Should they do it on their own or partner with an experienced third party?
What do you think?