Contrarian view of 10 Saasy rules

Cheezhead blogger Martin Snyder wants to disagree with Byron Deeter’s Top 10 Laws for SaaS.

I think he misses the main point: these rules are given from the perspective of an investor wanting to see a SAAS business succeed and not get bogged down with things that would encumber their growth and valuation, and from that perspective, to me, they all make perfect sense.

Deeter’s decalogue is a recipe for staying focused.

Snyder:

If firms already possess quality Internet application infrastructure, database licensing and admin, and advanced BI capabilities, why would they pay margin to SaaS firms ? Why accept integration and extensibility compromises to boot ?

Maybe some prospects won’t accept the SAAS compromises. So, what should a SAAS company do? Walk away! Or get bogged down.

Snyder:

if you don’t want to lop off a third of your market, you better believe that hybrid vendors may have an advantage over time as the reality of fixed and marginal cost infrastructure cases is realized

What is the cost to address this third of the market? Can a SAAS company be successful without it? My answers are: the cost is high and absolutely yes. Again, matter of focus.

Snyder:

If the application/ solution architecture is not easily amendable to multiple data centers, just how good is it?

It simply needs to be good enough to deliver on the value of the application to the users and the buyers, who don’t have professional deformations from being IT professionals, since they’re mostly business management.

Snyder:

highly robust web services, highly scalable infrastructure, and complex integration tools will become requirements to sell into larger and even medium businesses in a few years. Likewise salesforces, consulting, and technical service people will need to be trained to higher levels and that will cost more

This is one dimension of competition that the challenger SAAS player will always have as a disadvantage against its incumbent established player. And that is why in pure Innovator’s Solution style, the SAAS player has to use another dimension to compete and disrupt, such as using their momentum and ability to innovate faster to redefine the requirements for the market in which they’re playing.