The Softletter SaaS Report

SUMMARY

Over 425 pages of invaluable data and survey results on SaaS from the viewpoint of technology providers. “This report includes the most extensive benchmarking data available in the SaaS market today,” Jeff Kaplan, Managing Director of THINKstrategies, Inc. and the SaaS Showplace.

The Softletter SaaS Report is the most up-to-date source of metrics, benchmarks, and information available today on software publisher’s attitudes and best practice approaches to the SaaS tsunami sweeping the industry. If your business is SaaS-based or will be impacted by SaaS, this report is a must purchase.

SCOPE

• Comprehensive study of all aspects of running a company on the SaaS business model.  Report covers: Mergers & Acquisitions, churn and renewal rates, adoption of multi-tenancy, security standards, uptime guarantees, use of open source, pricing models, marketing and sales, pricing models, channels, and much more.

REASONS TO BUY

• CEO, CFO and COO’s - An invaluable resource for metrics and benchmarks for running a business based on the SaaS business model.
• A unique resource based on hard data that provides that guides guides you to business strategies and tactics most likely to succeed. 
• If your company is either introducing a SaaS product or will be impacted by SaaS the Softletter SaaS Report is a required presence in your R&D, sales, and marketing toolkits.

CONTENTS

The Economics of Subscription Software
The New High-Tech “Bubble” (Not the Same as the Old)
SaaS In The M&A Arena
Comeback Kid: SaaS Comes off the Canvas
SaaS Sales Compensation Models: Another Approach
ASP/SaaS Pricing Models
Complexity and Pricing.
Building a SaaS Software Pricing Model
The Odd Couple: Desktop Software Meets SaaS
Timing Disruption
The SaaS Channel: A Work in Progress
Building a SaaS Channel
Licensing Complexity: A SaaS Driver.
Product Management and SaaS
The Codies and Hosted Applications
The 2006 CODIES: Impressions and Comments
Escrow Agreements in the Age of SaaS
Salesforce.com, AppExchange, and the Platform Wars Redux.
Winning Business Models: Evolve or Die (Adobe)
Winning Business Models: New Products or Markets Often Require New Business
Models (SAP)
Four Critical Success Factors for Your Products
SaaS “Banks”: The Right Solution to Funding Your SaaS Startup?
A SAS 70 Audit: Should You Make the Investment?
States of Seduction: How to Work with State CIOs
The 2007 Codies: Views and Observations
Converting From a Licensed to a Subscription Model
Winning Business Models: SaaS as a Game-Changer
Softletter Case Study: Building a SaaS Channel
SaaS Deal Basics: What Needs to Be in Your Software-as-a-Service Customer Agreements
Product Management and SaaS: Changing the Game
Conserving Your SaaS Cash
Highlights from the Mural Consulting SaaS Survey
The Cloud and Your CIA (Confidentiality, Integrity, Availability)

The 2008 Softletter SaaS Survey Results

SaaS Company Profiles and Primary Markets Results
Development stage of your company
For how many years has your company been selling SaaS systems?
What are your current yearly gross revenues?
What is your primary market for your SaaS product?
What is your primary means of selling your SaaS product?
What is your most important secondary means of selling your SaaS system?
What percentage of your sales come from international markets?
SaaS Revenues, Pricing, Upgrades, and Installation
Did your company’s SaaS revenues grow from this period in 2007 to this period in 2008?
By what percentage did your revenues grow?
Is your SaaS company profitable?
Does your SaaS product offer more than one level of functionality (for example,
Standard vs. Professional)?
How many functionality levels do you offer?
Do you price your SaaS software on the basis of (please pick your PRIMARY method)
Based on concurrent seats, what is the average size of your typical initial sale in seats?
Based on concurrent seats, how many ADDITIONAL seats do you typically sell to the customer
during the twelve months after the initial sale?
Based on concurrent seats, approximately how much do you charge for your SaaS software
per month?
Based on named users, what is the average size of your typical initial sale in users?
Based on named users, how many ADDITIONAL seats
do you typically sell to the customer during the twelve months after the initial sale?
Based on named users, approximately how much do you charge for your SaaS software per
month?
On a per project basis, how much do you charge on a monthly basis?
What type of subscription options do you offer your SaaS customers?
What is your most popular subscription option?
How often do you push a “major update” of your SaaS product to your customers?
Do you charge for major new capabilities when they are introduced?
What other services do you charge for?
Do you allow your customers the option of installing your SaaS software behind their own
firewall rather than on your servers?
What percentage of your customers choose the option of installing your SaaS software
behind their own firewall rather than on your servers?
On a per anum basis, what percentage of your SaaS customer base resubscribes?
Product Architecture and R&D
Where does your SaaS client (the interface or “area” of the product with which a user
interacts) component execute?
If your SaaS product’s client component executes in a browser, please indicate which
browsers you support (pick all that apply)
Do you provide third parties with a documented API for your system?
Are you using commercial SaaS components or services in developing your
SaaS system?
Are all your SaaS customers served by a centralized data architecture (multi-tenancy) or
do you have separate databases for each customer?
Does your SaaS product incorporate Open Source software?
Are you developing a SaaS product on top of a third-party platform such as Force
(AppExchange), Intuit’s QuickBase or similar system?
Please tell us the platform(s) you are evaluating or using
Is the primary development of your SaaS product done by an outsource (a third-party firm
or firms hired for this specific task)?
Where is your outsourcing firm(s) located? (Please pick all that apply)
Do you believe it is more or less expensive to develop your software under the SaaS model?
What % of your overall company revenue is dedicated to research and development?
What percentage of your overall company revenue is dedicated to research and
development? (No percentage sign, please)
Do you maintain your own hardware/software infrastructure (servers, storage, security,
backup, software, etc) for your SaaS system in-house? Or do you outsource
this operation?
What percentage of your gross SaaS revenues do you spend on maintaining your SaaS
hardware/software infrastructure in-house?
What type of outsource model do you use?
If you are outsourcing the hosting of your SaaS product, what percentage of your gross
yearly SaaS revenues do you expend on the outsourced hosting services supporting
your SaaS product?
What percentage of uptime do you guarantee your customers? (All percentages assume
24/7/52 availability)
Is your SaaS system European Union Safe Harbor compliant?
Are your internal or external billing systems PCI compliant?
Do you use a third party to manage your SaaS payments and billing?
What % of your overall gross revenues are you paying for your billing services?.
Has your firm undergone a SAS 70 audit?
Please tell us what type of SAS audit you have undergone
Have you undergone a non-SAS 70 security and privacy audit by a third party?
Please tell us the name of the organization that performed your non-SAS 70 audit
Does your company provide an escrow option for your customers in the event of a service
interruption or your company going out of business?
Does your company provide a complete “fallover” guarantee in the event your company
goes out of business?)

SaaS Reseller Channels

Do you have a recommender program for your SaaS product?
Do you resell your SaaS product via an affiliate-label reseller program?
Do you resell your SaaS product via an aggregator?
Do you resell your SaaS product on an OEM basis?
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.)
Do you have value added resellers (VARs)?
How many VARs do you have?
Does your reseller program provide a branding option?
Do you require your resellers to undergo a training and certification program?
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?
What is the one-time payment as a percentage of the total revenue generated by the sale of
your SaaS system?
What is the average recurring revenue payment paid to your resellers?
What types of professional services do your VARs offer their customers (choose one)?
What percentage of your total gross SaaS revenues does your channel represent?
SaaS Sales Management and Compensation
When and how do you compensate your SaaS sales representatives?
Do sales representatives receive additional compensation for incremental sales to existing
SaaS customers?
Please tell us what percentage of your overall gross revenues are spent on your SaaS sales
activities

SaaS Sales Direct Sales and Compensation Metrics

Percentage of Direct Sales Personnel Who Achieved Quota Totals
Percentage of Direct Sales Reps Exceeding Quota Totals
Percentage by Which Direct Sales Reps Exceeded Quota
Base Salary for Software Direct Sales Reps
Average Yearly Salary for SaaS Direct Sales Reps (both fixed and variable)
Median Base Salary for SaaS Direct Sales Reps by Company Development State
Median Base Salary for SaaS Direct Sales Reps by Company Revenue
Medians of Sales Personnel Achieving Quota by Software Type
Medians of SaaS Direct Sales Personnel Achieving Quota by Development Stage
Medians of SaaS Direct Sales Personnel Achieving Quota by Company Revenue
Medians of Percentage of SaaS Direct Sales Personnel Exceeding Quota by Company Revenue
SaaS Direct Sales Force Close Rates

SaaS Marketing

What do you believe is the primary reason your customers choose a SaaS system?
What do you believe is the main secondary reason your customers choose a SaaS system?
Who are the analysts most likely to influence purchases of your product?
Please tell us what percentage of your overall gross revenues is spent on your SaaS
marketing activities
Please tell us what percentage of your overall gross revenues are spent on your SaaS
marketing activities

SaaS Initial and Professional Services

How do you charge for initial deployment services (these include training, application
testing, and deployment)?
If you answered “We charge up front for initial deployment services,” please tell us “What %
of your SaaS revenue is derived from the sale of initial deployment services?”.
Do you have a professional services group?
What service options does your professional services group offer?
What percentage of an average sale over 12 months of your SaaS system can be attributed
to revenue generated by your professional services? (Please include all service options that you offer.)
What are your plans for your professional service group?

Product Management and SaaS

Does your company implement “Agile”methodologies in its R&D?
Does your company employ product managers?
Does your product incorporate a “new features or capabilities” request mechanism by
customers directly within the SaaS system?
Do you use a commercial product such as FeaturePlan, Aspect 360, or similar product to
manage the implementation of feature requests into your product to assist you in
marketing your SaaS system?
If you do use such a program, please tell us which product you use. If you rely on a
combination of Excel, Word, Access, or related or similar products, please use the
word “Office” to indicate this
The Impact of SaaS on Product Management Methodologies and Practices
Develop MRDs  (marketing requirements documents)
Develop PRDs  (product requirements documents)
Understanding customer’s business processes
Regular customer contact
Regular contact with development
Regular contact with Marcom
Regular contact with the press
Regular contact with customer service
Regular contact with QA.
Regular contact with sales