2011 Software-as-a-Service survey

Monday, 18 April 2011

The Really Simple Systems SaaS/Cloud Survey is out, and once again it shows that confidence in cloud solutions continues to rise.

The PR company chose to focus on the social marketing results of the survey (“62% of small companies are using social networking in everyday business”), and Dennis Howlett picked up on the fact that despite general confidence in cloud solutions, accountants were not so confident in SaaS solutions.

But the original point of the survey was to see how confident people were in cloud applications, and CRM applications particularly. The survey shows that 66% of respondents were confident in Cloud CRM, and in fact 45% were already using a Cloud CRM service.

Which is great progress. I suppose it is a measure of how far we have come in the acceptance of Cloud CRM that nobody finds it remarkable any more!


SaaS Escrows – useful or pointless?

Friday, 26 November 2010

I keep getting called by traditional software escrow companies who are looking to move into providing such a service for vendors and customers of SaaS products. However, despite the glossy brochures I just don’t see how it can work.

With a traditional software escrow a trusted third party, such as lawyer or specialist escrow like the NCC, would hold a copy of the source code in trust for subscribing customers. If the escrow was triggered, by the vendor going out of business or even simply ceasing to support the product, the  customers could apply to the escrow company to release them the source code. All this made sense when the software product cost 100k or more, the escrow subscription cost the customer a few hundred and the customer had a large in-house team of programmers who could, in theory, maintain the inherited code. In practice I can’t think of a single example where an escrow was triggered, and I pity the poor programmer who would have had two million lines of COBOL dumped on him or her and told to update the system for a new tax rate.

But for SaaS the story is more complex. SaaS customers purchase a service, not a product, and what they would ideally like to know is that should the SaaS vendor go out of business then their application will keep running. To deliver the service you need the whole hardware & software stack: servers, firewalls, load balancers, operating system(s), web server, backend databases, plus a whole pile of add-ins for charting, pdf generation etc. And of  an up-to-date copy of the data, ideally sync’ed in real time. To make sure that all this would work in the event of an escrow being triggered the whole stack would have to built and tested, otherwise the chances of it working on the day are minimal. And, just to make life more interesting, whereas traditional software worked on a six month or yearly release cycle, SaaS systems get updated much more frequently, almost every day in our case. So what you end up with is a replicated datacentre that has to be tested every week to make sure that it still works. Which is basically what we at Really Simple Systems do, keeping a complete system on hot standby for instant switchover.

Doing all this is a lot more work than keeping a CD in a safe, and that cost would have to borne by either the SaaS vendor or their customers. As most customers are paying very little for their SaaS solution (because that’s the point!), paying the same again for an escrow protection doesn’t seem great value. And as customers aren’t clamouring for such a protection, it is hard to see why SaaS vendors would stump up a lot of money for something that their customers’ don’t see the value in.

A better solution is for SaaS vendors to put in their contracts that should their businesses fail, then the data legally belongs to the customer. After all, it is the data that is the most important asset in most systems – once you have the CRM data, then moving into another CRM system is not such a large task and could be done within a few days, even for the largest systems.

Which (he said smugly) is exactly what we do here at Really Simple Systems.

Really Simple Systems goes Free

Thursday, 21 October 2010

This week Really Simple Systems launched its Free CRM product, Really Simple Systems Free Edition. Freemium products are hot topic these days, with commentators divided as to whether they will actually make money instead of just taking market share, so I thought I’d run through the logic of what we’re trying to do and why.

The decision to launch a Freemium product was driven by three issues:

  1. We weren’t really making any money from one or two user systems by the time we had run through a pre and post sales process
  2. We wanted to get a larger market share in the US, where we have some customers but nothing like the numbers we have in the UK, and we don’t have $1m to throw at offices and marketing
  3. If we didn’t do this, somebody else would

We could have probably sorted out 1) by streamlining our sales process. The traditional solution to solve 2) is to raise cash from venture capital but in my experience VCs add a huge amount of pain and cost to small companies and no strategic value, and then walk away with a disproportionate amount of cake at the end. And as to 3), there isn’t an alternative but to be there first, if you believe, as I do, that cloud software will become a commodity offering with correspondingly lower and lower prices.

There is also the challenge that to offer a free product, it really has to be easy to use as we can’t afford to talk people through how to use it, and as the whole ethos of the company is to make CRM really simple, doing this would force us to improve the ease of use of the core product, which would be good for everyone.

So, it will be a learning process for us. We need to work on the documentation, help videos and data load process to help people pick up the product more easily. Our target is to sign 10,000 users in twelve months which will make us the largest (bar none) supplier of cloud CRM systems in the world. All we’ve done so far is put the product on our site and issued a press release and we’re signing up 15 users a day so far, so I think the 10,000 might if anything be on the low side.

As we said in the press release though, “We’re going to make life tough not just for conventional CRM vendors, but for Cloud vendors with high prices and high cost bases.”

Watch this space!

Rigid Procedures push up government IT costs

Wednesday, 11 August 2010

Computer Weekly ran a story on how the UK Government was looking to cut IT costs, and as the Government is currently also making a lot of (good!) noises about how they want to get small business supplying their IT solutions as well, I sent the following letter to to Computer Weekly, which was published this week:

Dear Editor,

I was interested to read your article “How will suppliers cut government IT costs? (Computerweekly.com/241973.htm)” and there are three reasons why Government IT costs will always be higher than those in the private sector.

Firstly, government purchasers always demand systems that have been highly modified to their perceived unique application and security requirements, and are reluctant to compromise by accepting off the shelf commercial systems. Secondly, tendering processes that are designed to purchase expensive solutions will always end up with expensive solutions – the cost of tendering will rule out cheaper vendors that may have had acceptable solutions. Thirdly, the contracting terms for doing business with the government are rigid and more expensive for suppliers, and these costs are passed on.

This is particularly true for cloud applications, where the economy of scale in delivering standardised solutions to 1,000s of users is rapidly reducing the cost of ownership. For example, a private company can make the decision to implement a cloud CRM solution for a nominal monthly fee by simply filling out a web form and entering a credit card. Government users cannot currently benefit from this revolution and in order to take advantage of such innovations, they need to move away from a rigid tendering and vendor evaluation process to more open minded search and selection.

Really Simple Systems has a new blog

Wednesday, 11 November 2009

Really Simple Systems now has a blog of its own, at blog.reallysimplesystems.com.

It is primarily for users of Really Simple Systems Hosted to keep up with product updates and company direction. And for users to feed back to Really Simple Systems.

Software Satisfaction Awards

Friday, 29 May 2009

Really Simple Systems has been nominated for the Software Satisfaction Awards 2009. Last year we won the Best SME CRM System category, beating a lot of much more famous names, some of which didn’t even make it to the short list.

This year we have been nominated for the Best SME CRM Software category again, plus a new category, Best Web-Hosted CRM.

If you like what Really Simple Systems does, do please vote for us – more details at Really Simple Systems Hosted CRM.


The small business CRM VAR is dead

Friday, 20 March 2009

Been a little tardy about new posts to this blog, but we’re all busy here at Really Simple Systems closing out yet another record quarter, to finish a record year. But this subject has been around my mind for two years now, and I think we’re cracked it at last.

In the old days (1990’s) you could make money selling accounting systems to small businesses. You’d get a 35% margin on the product (SunSystems, Tetra, Multisoft, Omicron –ah! those names from the past!). You’d charge £4k for the software, about the same again for installation, set up and training, and then (if you had a nice vendor) get a decent margin on the annual maintenance contract, plus upgrades, add-ons and the occasional bit of extra consultancy.

In the old days (2000) you could make money selling CRM systems to small business. You’d get a 40% margin on the product (Pivotal, Onyx, Maximizer – ah! those names from the past!), about the same again for training…. you know the rest.

Heck, back in the really old days (1980’s, showing my age here), you could make money selling word processing and spreadsheets to small businesses, and you could sell the PC too. And a printer, floppy disks, old fashioned paper with holes in the sides of it, the list was endless.

The point I’m trying to make here is that one decade’s nice little business for a VAR is the next decades’ commodity. People buy accounting software off eBay, and kids are taught how to use Word and Excel at school. So now the turn has come for small business CRM systems.

It all started when I was trying to pitch Really Simple Systems to a Maximizer reseller. “Instead of selling Maximizer for £5k plus £5k consultancy, you could be selling Really Simple Systems for £4k and £0 consultancy – your customers will be ecstatic!” I burbled. “And what’s more, they don’t have to pay you all up front but by subscription!” Well, maybe the customers would be ecstatic, but the VAR wasn’t, I’d just destroyed his business model. We gave up trying to recruit existing CRM VARs.

After a while though, other organisations started approaching us. Marketing companies who ran lead generation campaigns for their customers. Outsourced IT companies that had customers paying by subscription. These people didn’t know how to install a CRM system that needed SQLServer as a backend, or how to synchronise laptops to the central server. They didn’t need to. What they knew was how a CRM system would add value to their existing services, not be their service.

So, the old small business CRM VAR is dying, squeezed by the new SaaS systems and by the recession. The savvy ones will move upmarket and install expensive and complex products like NetSuite and Oracle/Siebel. But there is a new breed of CRM VAR waiting to take their places, people who have sales, marketing and business skills instead of IT skills.

Long live the new small business CRM VAR!

(right, that’s enough for this month, I’m off skiing in St Anton!)