Contents
Introduction and Methodologies 3
Report Highlights and Observations 13
What is your primary market for your SaaS product? 14
Did your company's SaaS revenues grow from this period in 2010 to this period in 2011? * 15
Company Profiles and Demographics 41
Development stage of your company? 42
Current gross revenue? 45
For how many years has your company been selling SaaS systems? 48
Primary Market Results 51
What is your primary market for your SaaS product? 52
SaaS Revenues, Pricing, Upgrades and Installation 61
Did your company's SaaS revenues grow from this period in 2010 to this period in 2011? 63
By what percentage did your revenues grow? 67
What percentage of your revenues come from international markets? 72
Is your SaaS company or business unit profitable? 76
Functionality and Updates 81
Does your SaaS product offer more than one level of functionality? 82
How many functionality levels do you offer? 86
How often do you release a "major update" of your SaaS product to your customers? (A "major update" is defined as including significant new features and functionality, not just incremental improvements and bug fixes) 90
Do you charge for major new product capabilities when they are introduced? 95
Freemium and Trial Access Programs and Conversion to Sales 101
Do you offer a "freemium" version of your SaaS system? 102
Over the last 12 months, what percentage of your freemium subscribers converted over to any paid version of your SaaS system? 107
Based on paid conversions from freemium versions, approximately how much do you charge per seat for your SaaS systems per month? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 112
Do you offer trial access to your SaaS software? (Trial access is defined in this survey as the process of allowing a potential subscriber or company to have complete access and usage to at least a basic version of your software that's completely functional. We do not define trial access as a system that cripples the SaaS software in some critical way, such as preventing the user of the system from storing records or marking the output of the system or labeling it in such a way that the system could not be used for commercial purposes.) 117
Do you allow visitors to your SaaS site to sign up for trial access to your SaaS system without first speaking to a sales or marketing person in your organization? 122
Over the last 12 months, please tell us what % of your trial access prospects converted to a paid version(s) of your SaaS product? 127
If the trial period ends without a conversion to sales: 132
Pricing and Subscription Models 137
Do you price your SaaS system on the basis of (please pick 138
your PRIMARY method): 138
Based on concurrent seats, what is the average size of your typical initial sale in seats? 143
Based on concurrent seats, how many ADDITIONAL seats do you typically sell to the customer during the twelve months after the initial sale? 148
Based on concurrent seats, approximately how much do you charge per seat for your SaaS software per month? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 153
Based on named subscribers, what is the average size of your typical initial sale in paid subscribers? 158
Based on named subscribers, how many ADDITIONAL seats do you typically sell to the customer during the twelve months after the initial sale? 163
Based on named subscribers, approximately how much do you charge for your SaaS software per month? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 168
On a per project basis, how much do you charge on a monthly basis? (Please provide a monthly cost even if you have signed the customer to a subscription agreement that spans X period of time) 173
What is your most popular subscription length option? 174
Please check all the subscription options you offer your customers 179
Discounting and Pricing Methodologies 181
Do You Offer Discounts to Customers Who Sign Quarterly, Yearly or Multi-Year Contracts? 182
Based on offering quarterly contract length discounts, what percentage discount do you typically offer over your monthly subscription pricing? 186
Based on offering yearly contract length discounts, what percentage discount do you typically offer over your monthly or yearly subscription pricing? 187
Based on offering multi-year contract length discounts, assuming a two year or more contract, what percentage discount do you typically offer over your monthly or yearly subscription pricing? 192
Do you have different pricing and subscription models for each country you do business in? 197
Do you typically create custom contracts for new customers or sign them up using standardized contracts? 198
Do you publish your pricing schedule on your website? 200
SaaS Hybrid Models 205
Do you allow your customers the option of installing your SaaS software behind their own firewall (on their servers, the licensed model) rather than on your servers? 206
What percentage of your customers choose the option of installing your SaaS software behind their own firewall rather than on your servers? 211
SaaS Resubscription Metrics 217
On a per annum basis, what percentage of your SaaS customer base resubscribes? 218
On a per annum basis, what is the revenue renewal rate of your SaaS customer base? As a simplified example, if you entered the year with 10 customers paying $1M, what were the revenues generated by those customers at year's end? If the revenue generated was $1.1M, that represents a 110% renewal rate or 10% gain. If the number is $900k, that represents a 90% renewal rate (or a 10% revenue loss/churn). Your answer to this question will help us understand how SaaS companies are managing the overall revenue value of their customer base 223
Product Architecture and R&D 229
Does your company implement "Agile" methodologies in its R&D? 230
What is the principal Agile methodology used by your development group? 235
Please tell us the primary business advantage of using Agile methodologies in your development cycle 240
Where does your SaaS client (the interface or "area" of the product with which a subscriber interacts) component execute? 245
Do you provide third parties with a documented API for your system? 250
Does your SaaS product incorporate Open Source software? 255
Are you using third party components such as Boomi, Cast Iron, Pervasive, etc. to automate data and business process integration in your SaaS applications? 259
Have you developed a "smartphone" mobile application interface for your SaaS system? 260
Which of the following best describes your SaaS software architecture? 265
How was your SaaS multi-tenancy architecture primarily implemented? 270
Please tell us the primary reason you have not implemented a multi-tenanted architecture in your SaaS system 275
Is the primary development of your SaaS product done by an outsource (a third-party firm or firms hired for this specific task)? 276
Are you developing a SaaS product on top of a "full SaaS stack" third-party platform (PaaS) such as Force (Salesforce.com), Servoy, NetSuite's SuiteFlex or similar system? (Softletter defines a "full stack" SaaS product as one in which the vendor supplies most, if not all, of the underlying infrastructure and middleware required to run a SaaS application. For example, a full stack SaaS development platform typically supplies the underlying hardware, database, and middleware an application needs to run in an online environment, in addition to the programming language/tools required to build a user interface and business logic.) 281
Please tell us the primary reason you have not developed an application in a PaaS platform 285
SaaS Infrastructure Models 291
Do you maintain your own hardware/software infrastructure (personnel, servers, storage, security, software, etc) for your SaaS system in-house? Or do you outsource your infrastructure operations? For the purposes of this survey, colocation, where you own servers stored at an offsite location, is regarded as an in-house infrastructure model 292
What percentage of your gross SaaS revenues do you spend on maintaining your SaaS hardware/software infrastructure internally? (Please include the cost of all hardware and software such as servers, routers, backup hardware, cost of your server OS, web server software, security monitoring systems, etc. Please also include the salaries of the personnel required to manage your infrastructure, including any security personnel costs, whether in-house or third party. For example, if your total revenues over the last 12 months were $1m and you spent $100k on your infrastructure costs, you spent 10% of overall revenues) 297
What percentage of your gross SaaS revenues do you expend on outsourced infrastructure services supporting your SaaS product? (For example, if your total revenues over the last 12 months were $1m and you spent $100k on your infrastructure costs, you spent 10% of overall revenues) 302
What type of outsource model do you use? 307
Is your infrastructure company SAS 70 (SSAE 16) certified? 312
Is your infrastructure provider ISO 27001 certified? 317
Please tell us the name of the primary Cloud infrastructure provider you are using 322
What baseline percentage of uptime do you guarantee your customers? (All percentages assume 24/7/52 availability and also assume they have not contracted for additional or premium uptime service levels) 327
SaaS Security, Standards and Audits 333
Has your firm undergone a SAS 70 (SAAE 16) audit? 334
Please tell us what type of SAS (SSAE 16) audit you have undergone 339
Have you undergone a non-SAS 70 security and privacy audit by a third party? 344
Are your internal or external billing systems PCI compliant? 349
Is your SaaS system European Union Safe Harbor compliant? 353
SaaS Escrow and Fallover 357
Does your company provide an escrow option for your customers in the event of a major service interruption or your company going out of business? 358
Does your company provide a complete fallover ("failover") guarantee in the event your company goes out of business? (A fallover guarantee means a third party will take over operations, maintenance and provisioning of your system for X period of time until you can migrate your data and business processes out of the current SaaS application or until another entity can be found to maintain operation of the system) 363
How is your fallover provision delivered? 364
What percentage of your customers or potential customers require you provide an escrow or fallover service as a condition of conducting business? 365
SaaS Regular and Alternate Reseller Channels 367
Do you have a recommender (agent) program for your SaaS product? (A recommender program pays an individual or company of record who recommends, but does not resell, your product) 368
How much do you pay recommenders of record for subscription sales. (Please provide a % figure based on the value of the initial subscriptions for the the first 12 months of the subscription period even if you pay a fixed fee to the recommender; this will allow us to establish a baseline figure) 373
Do you resell your SaaS product via an affiliate-label reseller program? (An affiliate label program allows other companies to resell your software, usually from a link on your website. Affiliate resellers are normally automatically paid via an affiliate management system such as SaaS Max. In an affiliate sale, your company normally "owns" the customer in terms of company contacts and future business) 378
Do you resell your SaaS product via an aggregator? (An aggregator assembles a laundry list of SaaS applications for resale to their customer base) 383
Do you resell your SaaS product on an OEM basis? (In an OEM sale, your product is directly incorporated into another application. Your product's core functionality can be altered to meet the OEM purchaser's requirements and your corporate and brand identity, with the exception of licensing information, set aside in favor of those of the OEM customer's product and services) 388
Are you reselling your SaaS product via a distributor? (A distributor, such as Ingram or TechData, normally resells your product in turn to its resellers) 393
Are you reselling your SaaS product via VARs (value added resellers)? 394
How many VARs do you have? 399
Does your VAR reseller program provide a branding option? (A branding option keeps your product identity intact but also incorporates the reseller's logo and company information into the SaaS system's initial login and/or operating screens) 404
Do you require your VAR resellers to undergo a training and certification program? 409
Do your VAR resellers offer professional services? 414
Over the last 12 months, what percentage of your total gross SaaS revenues did your VAR channel generate? 419
Do your resellers receive a one-time payment for a SaaS sale? Or do they receive a recurring payment from your company as long as certain performance goals are met? 424
What is the one-time payment as a percentage of the total revenue generated by the sale? 429
What percentage of the recurring revenue of the sale do you pay to your VARs? 434
SaaS Sales Metrics 439
What is your primary means of selling your SaaS product? 440
What is your most important secondary means of selling your SaaS product? 445
Please tell us what percentage of your overall gross revenues are spent on your SaaS sales activities. (Please do not include the cost of marketing programs such as print advertising, website advertising, E-mail and snail mail campaigns, search engine optimization, social bookmarking and related programs. Also please do not include the salaries of marketing, marcom and product/community management personnel) 450
SaaS Marketing Metrics 451
What do you believe is the primary reason your customers choose to subscribe to a SaaS system? 452
What do you believe is the main secondary reason your customers choose a SaaS system? 457
Please tell us the primary concern about subscribing to your SaaS system raised during the sales cycle by potential subscribers 462
Please tell us the main secondary concern about subscribing to your SaaS system raised during the sales cycle by potential subscribers 467
Who are the analysts most likely to influence purchases of your product? (Please pick all that apply) 472
When describing your system to your customers, which acronym/phrase predominates in your marketing collateral and during discussions with potential subscribers? 473
Please tell us what percentage of your overall gross SaaS revenues are spent on your SaaS marketing activities. (Please do not include sales salaries, expenditures for sales support software such as contact management/CRM, sales pipeline management, sales training, internal sales incentive programs and similar activities or costs) 478
SaaS Customer Service 481
Do you offer paid support programs? 482
Please tell us how many levels of paid support you provide your customers. (Please pick all that apply) 487
Please tell how your structure your customer support department in terms of personnel who provide customer assistance and service. (Please pick all that apply) 492
Please tell us what customer service metrics you track. (Please pick all that apply) 497
SaaS Initial Deployment and Professional Services 503
How do you charge for initial deployment services (these include training, application testing, and deployment)? 504
What percentage of your average initial SaaS sales revenue is derived from initial deployment services? For example, if the initial sale generates $1000, and the customer purchases $100 in basic training services, the percentage would be 10% 509
Do you have a professional services group? 514
What percentage of an average sale over 12 months of your SaaS system can be attributed to revenue generated by your professional services? (For example, if an average sale generates $1,000 in recurring revenue over 12 months and your customers typically purchase $3000 in advanced application training, the amount would be 25% ($12,000/$3,000). Please add all professional service options that you provide into this number) 519
Over the last 12 months, what was the highest percentage of a sale generated by your professional services organization? 524
What are your plans for your professional service group? 529
Community and Product Management in SaaS 535
Does your company employ product managers? 536
Does your company employ community managers? (In a SaaS company, community managers are responsible for creating and managing a SaaS community of customers and potential customers. Tasks associated with this responsibility can include transmitting customer requests for new capabilities to development, providing detailed reports on customer satisfaction with the company's products and services to management, creating promotions and cross- and up-sells to the customer base, and leveraging the customer community to lower support costs) 541
Please describe the role of community managers at your organization 546
Integrated Requirements Management, Analytics and Communities 551
Does your product incorporate a "new features or capabilities" requirements request mechanism by customers directly within the SaaS application environment? 552
How are you implementing your requirements management system? 557
Does your product system incorporate a customer community management system directly within the SaaS application environment? (By "within" we mean the customer can access the community from within the SaaS system via either direct access to an integrated community module or a direct link to a third party module) 562
How are you implementing your customer community management system? 567
Does your product incorporate a customer usage tracking analytic system directly within the SaaS application environment? 572
How are you implementing your analytics management system? 577
Further Important Reading for SaaS Companies 583
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